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China’s Tencent Leads $48m Series B Round In South African Payments Startup Ozow

November 17, 2021

Ozow, a South African payments gateway that allows people to make payments using their basic bank accounts, has received $42 million in a Series B round to expand its alternative payment options for its millions of merchants and customers.

Tencent, the Chinese internet powerhouse, led the deal, with Endeavor Catalyst and Endeavor Harvest Fund also investing. Reid Hoffman, the chariman of LinkedIn, was also involved in the round as the chair of Endeavor Catalyst’s investment committee.

“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,” CEO Thomas Pays said in a statement.

“What we wanted to address was a central platform that could basically provide solutions to e-commerce, point of sale, e-billing and peer to peer payment.”

Ozow also intends to use the capital to grow its team from 100 to 250 people, including staffing its new European headquarters. In the following six months, a portion of the cash will also be devoted toward mergers and acquisitions as well as pan-African expansion to four countries: Namibia, Ghana, Nigeria, and Kenya.

Why The Investors Invested

Ozow’s success in attracting the latest investment lies mostly in the traction it has generated since its inception. Ozow’s business has grown 100 percent year over year since the company raised $2.5 million in its Series A round in 2019. It handles over $100 million in monthly transaction volume from thousands of retailers.

“We are also seeing a growth in new users, which is in excess of 140,000 per month. That’s quite an incredible growth and adoption,” Pays said.

“And this is certainly due to the consumer and merchant education that we had to go through over the past seven years as it was quite an innovative solution that no one was really familiar with before.”

Ozow raised $1.2 million in angel and seed rounds between 2016 and 2017, bringing their total raise to $3.7 million to date. This Series B financing, however, has upped that figure to $51.7 million.

Pays is especially pleased with the company’s new investors, who helped make this possible. According to Pays, Tencent committed over half of the total funds, or $20 million, as the principal investor.

“It’s an honour 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,” Pays said in a statement.

A Look At What The Startup Does

Thomas Pays founded Ozow in 2014 to promote financial inclusion through open banking. When customers perform online transactions, the corporation gives them access to their internet banking platform.

Before Ozow, manual ETF processes were the most common way to conduct online transactions, according to Pays. Most fintechs and banks didn’t realize the importance of using bank payments to facilitate internet transactions at the time.

Ozow was created by Pays to automate the manual ETF process that customers used to pay via e-commerce, point-of-sale, e-billing, or peer-to-peer (P2P) means. Pays wanted Ozow to “make it seamless for users to pay in three clicks,” according to Pays.

This is how the platform, which serves over 47 million bank account customers, usually operates. When consumers shop online or in-store, they first choose Ozow as a payment option.

Then users select their bank (from a list of all 10 main South African banks), log in with their online banking credentials, and Ozow handles the rest.

To accept payments, all retailers need is a bank account and a “smart-enabled gadget.” Leading enterprise firms such as MTN, Vodacom, Shoprite Group, Takealot, and Uber are among Ozow’s clientele.

Individual users can use Ozow for free. In addition, merchants can use the payment gateway for free for the first 12 months, or for up to $1 million in monthly processing value.

Distributors, payment service providers, and resellers of the company’s product are also involved. For each successful transaction done through Ozow, they are charged a percentage fee ranging from 1.5 to 2.5 percent.

Before Ozow, electronic funds transfers (EFTs) accounted for around 4% of all e-commerce sales in South Africa. ETFs are now South Africa’s second most popular payment option (after cards) for e-commerce, with a volume of over 30%.

RPP (Rapid Payment Programme) is also being rolled out by the company to build an instant payment environment that would allow users to make real-time payments using simple identifiers like mobile numbers or email addresses.

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Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning write

Social Media Has Redefined How People Shop

August 13, 2021

By Thomas Pays

Since the late 2000s, social media has become an integral part of our daily lives – whether to connect with friends and family, share information with others, or stay updated on the latest news and trends.

With an average of 3.5 hours spent on social media each day by South Africans, according to the latest stats from Hootsuite, it has been a natural evolution for these networks to become the new marketplace for consumers.

Thomas Pays is the CEO and co-founder of Ozow. — **Thomas Pays, CEO and co-founder of Ozow.**

Coined social commerce, social media platforms have introduced shopping portals and added functionality to allow people to buy and sell goods directly off their platforms.

Back in 2016, Facebook launched its Marketplace to cater to people wanting to use their social media platforms to shop locally. Many of the other social media platforms followed suit, opening a whole new marketplace for consumers.

Thomas Pays, Co-Founder and CEO of Ozow – a leading Instant EFT payment solutions provider, says that Facebook, Instagram, Twitter, Pinterest, and even TikTok, have capitalised on this trend by introducing social commerce on their channels as a new way for people to buy and sell goods online.

“The move has helped to redefine where and how people shop,” he says.

Younger Consumers Driving Social Commerce

While the pandemic has amplified the usage of social commerce, Gen Z (aged between 9-25 years) and Millennial (aged between 16-40 years) consumers have been using social media for years as a source of information of products and services that they are considering using.

“With Forbes citing that 40% of all shopping is currently being done by Gen Z alone, retailers would be foolish to underestimate the power that social media wields on their bottom line,” Pays points out.

Combined, the Gen Z and Millennial generations have fast become the largest consumer generation in history. In South Africa, this equates to 73% of our population – a powerful consumer base online.

Younger consumers have moved beyond traditional eCommerce favoured by millennials and are more likely to use social commerce — the practice of purchasing wholly within a social media platform.

What makes it work is that the algorithms provide a personalised shopping experience (thereby reducing the risk of abandoned carts), all while delivering greater engagement that gives them the ability to co-create an experience that is uniquely their own.

Benefits of Social Commerce

Apart from the immediate benefits, there is tremendous value in entrepreneurs using social commerce as a way to sell their goods and services.

“For novice digital entrepreneurs who are just entering the market, social commerce acts as the perfect gateway to more formal eCommerce platforms that they may use in the future. Platforms like the Facebook and Instagram marketplaces, for example, have been designed to be simple enough that anyone can buy and sell online – opening up the eCommerce system to millions of new users,” adds Pays.

A recent study of 23 African and Asian countries, which was conducted by the United Nations Conference on Trade and Development (UNCTAD), found that 58% of businesses that sold primarily through their own eCommerce channels saw a drop in monthly revenue during the COVID-19 pandemic.

In comparison, businesses that used third-party marketplaces and social channels saw a collective increase in sales of 64%.

“While the increased usage of social commerce by these consumers continues to redefine the way retailers operate, their shopping behaviour during this pandemic cemented their value as a generation of consumers steadfast on transforming the economy,” says Pays.

Thomas Pays is the CEO and co-founder of Ozow.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

MTN Partners Ozow in South Africa to Make MoMo Transfers Simpler

November 12, 2020

Africa’s leading Telecommunications Company MTN has partnered with Ozow to make loading funds simpler for Mobile Money (MoMo) users in South Africa. Speaking on the development, the CEO of Ozow Thomas Pays said that the partnership is viewed by his organization as “one more step in our efforts at displacing cash and enabling greater digital and financial inclusion for all South Africans. The rapid growth of mobile money services this year points to the growing demand among South Africans for safe and efficient ways to store, send and spend money via their mobile device.”

MTN MoMo was launched at the beginning of 2020 and crossed the one million user milestone in June. It offers users an easy way to send money to friends and family members as well as access to a range of value-added services such as purchasing prepaid electricity, renewing car licence discs, and purchasing products online through a network of affiliated eCommerce partners.

Felix Kamenga, Chief Officer of MTN SA’s Mobile Financial Services said that MTN will continue to introduce innovative new features to benefit our users, with a number of new services having rolled out over the past few months. “Our partnership with Ozow” according to him, “is another step toward making it easier, safer and more convenient for millions of South Africans to conduct essential and convenient transactions via their mobile device using a simple USSD number or in-app.”

Africa is the centre of the global mobile money industry. Data from the GSMA suggests there are 469 million registered mobile money users in sub-Saharan Africa, transacting 23.8 billion times at a value of $456.3-billion in 2019 – nearly two-thirds of the global total. However, Southern Africa accounted for only 2% of registered mobile money accounts in sub-Saharan Africa, pointing towards tremendous growth potential.

“Any effort at greater digital and financial inclusion in South Africa needs a mobile-first strategy,” says Pays. “Smartphone penetration in South Africa reached 90% this year, but that leaves 10% still using feature phones. To support this customer segment, we have worked with MTN to enable a USSD service from which they can load funds to their wallet quickly and safely. We see this as another positive step toward the mass adoption of digital financial services in South Africa and support our efforts at displacing cash for the benefit of all.”

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry