How Uganda’s Swipe2pay helps SMEs accept payments, access capital

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Ugandan fintech startup Swipe2pay is supporting SMEs by allowing them to accept mobile money payments and access credit services.

Informally launched in 2016 before a full rollout last year, Swipe2pay is a web and mobile payments solution that helps SMEs accept mobile money and debit card payments.

The startup, which earlier this year was selected to take part in the latest Google Launchpad accelerator programme in Africa, has integrated its platform with the mobile money services of MTN Uganda, Airtel Uganda and M-Pesa to help it process payments, and targets the grey market in particular. It is not just about accepting payments, however.

“MSMEs represents between 40 and 60 per cent of GDP, and constitute more than 95 per cent of all firms, in any emerging market across Sub-Saharan Africa. Unfortunately, they often operate in the shadow or informal economy, and are severely cumbered by limited access to risk capital,” Solomon Kitumba, co-founder and CEO of Swipe2pay, told Disrupt Africa.

“Our product is a mobile point of sale that helps SMEs to sell smarter cashlessly, and manage their businesses better. It also helps them get a better understanding of their businesses with a smart dashboard with real-time data on how their businesses are performing.”

The Swipe2pay platform allows small business owners to keep track of their cash flow, and manage stock and inventory. It also generates comprehensive business performance data that is used to determine their creditworthiness, building alternative credit scoring models for small businesses and easing access to finance.

“Swipe2pay takes on a 2 pronged approach to de-risk lending to MSMEs by formal financial institutions,” Kitumba said. “First, it empowers the business owners with the right tools to manage the finances and operational capacity of the enterprise. Second, it is a tailored financial lending solution that leverages the digital footprint as a credit history for the micro, small and medium firms to enable them access the right kind of capital for them to grow their business.”

In the long run, he said, the aim is to ease the transition of these enterprises into the formal sector. So far, Swipe2pay has recorded over 2,500 transactions through its platform, and it is now working with over 600 merchants in its public beta stage. The startup, which generates revenues through transaction fees, raised US$40,000 in funding from Leapfrog Ventures last year, and is looking at the wider East African market.

“We are expanding into two new markets – Kigali and Nairobi – where we believe our solution is a perfect fit and much needed,” said Kitumba.

It does face competition in this space, most notably from South Africa’s Yoco, but Kitumba believes Swipe2pay’s experience in less-developed markets where mobile money is king will prove key. Most important to the startup’s ongoing success, however, will be securing buy-in from all relevant stakeholders.

“Most SMEs still use manual processes to carry out their daily operations, and are still skeptical to use digital tools,” said Kitumba. “Formal financial institutions such as commercial banks and microfinance institutions have also not fully embraced the use of data-driven innovations for credit scoring and lending decisions.”

All of this is likely to change over time, however, and Swipe2pay is ensuring it is in a strong position for when that day comes.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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