South African fintech startup, Ozow bags $48m in a Series B round led by Tencent

South African fintech startup, Ozow bags $48m in a Series B round led by Tencent

South African fintech startup, Ozow has announced the close of a $48 million Series B funding round to enhance its product offering and expand into new markets.

Ozow’s $48 million Series B round is led by the Chinese internet giant, Tencent, and also includes Endeavor Catalyst and Endeavor Harvest Fund.

“It’s an honor to bring on board Tencent, Endeavor Catalyst, and Endeavor Harvest Fund. This is a validation of our role in transforming the banking industry through the development of innovative, convenient, and more inclusive payment solutions for everyone,” CEO, Thomas Pays said in a statement.

Providing Financial Access for the Underbanked

Launched in 2014 by the trio of Thomas Pays, Mitchan Adams, and Lyle Eckstein, the fintech company provides millions of merchants and consumers with easy, fast, and secure alternative payment solutions, including QR codes, point of sale, e-commerce, e-billing, and peer-to-peer payments.

Ozow, which rebranded itself from i-Pay in 2019 works with major retailers such as MTN, Vodacom, the Shoprite Group, Takealot, and Uber.

Ozow was founded to deepen financial inclusion in South Africa through open banking. Before the establishment of the startup, manual EFT processes were the popular options to carry out transactions online. At the time, most fintech and banks did not recognize the need for using bank payments to facilitate online transactions. According to the CEO, Ozow was founded to “make it seamless for consumers to pay in three clicks.”

“When you looked at e-commerce, point of sale, e-billing, or P2P payment seven years ago, it was always a fragmented market. For example, if I want a point-of-sale device, I need to go to a company like Yoco. If I want to accept payments via card on my e-commerce site, I need to go to a PayU,” the CEO stated in an interview with TechCrunch.

What Next?

The latest fundraising will support Ozow’s efforts to transform the banking ecosystem and create greater financial access for the underbanked. It will also assist Ozow in cementing its position as one of the leading payment providers on the continent, and help it expand into new markets.

A portion of the funds will also be directed at mergers and acquisitions and pan-African expansion to four countries in the next six months: Namibia, Ghana, Nigeria, and Kenya.

“We’re also heavily focused on expanding our product offering. This will largely be driven through the development of new products, as well as a strong focus on strategic investments that include mergers and acquisitions,” Pays said.

Since Ozow’s Series A funding round in June 2019, the company has seen 100 percent year-on-year growth. It now processes over US$100 million in transaction volumes monthly across a network of thousands of merchants. The company continues to see increased growth in its user base, with more than 120,000 users joining the platform each month.