Startups across Africa are launching a wide variety of solutions aimed at increasing access to payments and remittances services, but few are focusing on the security aspect. One company this is doing so is Nigerian fintech platform Vesicash.
A digital escrow service, Vesicash was built to prevent digital fraud and disputes by providing payment security for all parties involved in P2P or marketplace transaction.
The startup, which raised US$100,000 in pre-seed funding last November and is now pursuing a larger round, was formed a year ago in a bid to address the lack of trust in the digital payments space.
“Starting out, our first undertaking was a six-month-long extensive research into the digital marketplace and payments in Ghana, Nigeria and Africa as a whole, in order to fully understand the deficiencies within the space,” Ibrahim Oladele, Vesicash co-founder and chief executive officer (CEO), told Disrupt Africa.
“There are countless cases of people not receiving value due in transaction and people getting scammed when engaging in digital transactions.”
Vesicash looks to address all this. While there are now numerous ways of making payment for transactions, be it via debit or credit cards, bank transfers, cash, or mobile money, security is always questionable.
“The problem with using debit and credit cards and bank transfers to make a payment for a transaction remains the fact that it doesn’t prevent you from being defrauded,” Oladele said. “It doesn’t provide the much-needed assurance that the person making payment for a transaction will receive value for their money. Cash on the other hand, has its inherent security risks, as well as its limitations in the case of high value transactions.”
While payment service providers have done a great job in making their services convenient and accessible for users looking to engage in online transactions, this lack of accountability remains a hindrance to uptake.
“That’s where we come in,” said Oladele. “Vesicash is the trust component that ensures that the parties involved in a transaction can do so with the knowledge that their interests are protected and that the other party will hold up their end of the deal, allowing transactions to be carried out confidently and with peace of mind for both parties.”
Built originally for marketplace and social commerce platforms, Vesicash has seen a significant volume of the transactions it has processed so far come from the services sector.
“We’ve seen freelancers like software developers, artists and content creators elect to use our system to receive payments for their services. A key reason for this is our milestone feature, that allows them to receive payments as they complete set targets for a project instead of waiting until the end and being at the mercy of their client,” Oladele said.
“We’re keen on our potential in this sector as the gig economy is one that each member of the founding team has been gainfully engaged in at some time or the other, and we find the use case very relatable.”
So far, Vesicash has processed over US$20,000 worth of transactions from peer to peer transactions, earning revenues on a tier-based fee schedule ranging from as low as 1.5 per cent to 2.5 per cent per transaction.
“For marketplace integrations, we are more flexible with our charges, depending on the volume or typical value of transactions processed on the platform,” said Oladele. “We understand that the bottom line is very important for fledgling platforms, so we’re not hardline about it and always make sure that we come to a mutually beneficial arrangement for any platform looking to integrate.”
Currently operating only in Nigeria, Oladele said Vesicash nonetheless has plans to secure strategic partnerships to offer its payment security solution to other countries within West Africa and Africa as a whole. Key to its growth will be customer education, however.
“While the concept of using a middleman as a guarantor for transactions is not a novel one to Nigerians by any stretch of the imagination, this method of securing transactions has not exactly translated to the online space in Nigeria,” he said.
“Though potential customers are familiar with the concept, the term “escrow” is not one that resonates with them, as well as its applicability to the online sphere. We have our work cut out for us here to educate and become top of mind to Nigeria’s expanding number of citizens who carry out online transactions, but our capable team is up to the challenge.”