South African financial technology (fintech) startup Lipa Payments has secured a R10-million investment from Empowerment Capital’s Imvelo Ventures, which is backed by financial services firm Capitec Bank, for its software solution that enables informal sector merchants to accept contactless payments directly from a mobile phone.

The solution was developed in 2019 by fintech entrepreneurs Thando Hlongwane and Roger Bukuru, and the Lipa Payments solution was one of the finalists in Capitec Bank’s Life 2.0 Hackathon in 2020.

Lipa partners with banks and other fintech companies to enable affordable, accessible and fast payments for merchants, even if they have low-end mobile phones. It is also safer and more hygienic than dealing in cash.

“We see tech as a scalable tool to solve everyday challenges. Lipa Payments gives small-scale merchants low-cost technology to accept digital payments at the point of sale and allows buyers of goods and services to pay digitally without having to worry about cash or network coverage,” says Hlongwane.

To date, there is limited infrastructure to support digital payments at local spaza shops, hair salons or fast-food stores and most micro-merchants can’t afford to buy point of sale devices.

For banks and fintech companies, the distribution and maintenance of point-of-sale devices can be costly.

“Informal sector merchants have traditionally relied on customers having cash on hand to transact, but Lipa Payments is changing that. There are obvious constraints to trading with cash and it is only getting more difficult in a digital, cashless global economy,” notes Bukuru.

Lipa Payment plans to roll out its software-as-a-service solution across South Africa and Nigeria in 2022, the company adds.

“A key part of our digital strategy is to partner with fintech companies to accelerate the delivery of our offer and to create unique opportunities through partnerships. Lipa Payments was selected as one such investment through our Imvelo venture capital fund.

“They are a young, dynamic and agile team of tech entrepreneurs who have an intuitive grasp of the unique operating environments in Africa and how to apply technology to enable people to live better,” comments Capitec Bank Innovation and Digital Strategy manager Francois Dempers.