After obtaining a license for its open-loop mobile wallet, axisPay, from Egypt’s apex bank, the Central Bank of Egypt (CBE), Egyptian fintech company Axis has released its digital payments platform to the North African market.
This provides a digital banking alternative for small businesses and the employees of those enterprises.
This comes over 18 months after the startup company got a seed investment of $8.25 million, co-led by Tiger Global, Sawari Ventures, and Raba, with participation from Firstminute Capital and RaliCap, as well as the founders of Venmo, Rho Banking, and Cred, and executives from Plaid and Revolut.
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Remarks from Axis’s CEO
In a recent interview with TechCrunch, Axis co-founder and CEO Jacques Marco revealed that the company has been operating in the shadows while it engages regulators and obtains the appropriate licencing for operations. “We’ve been focused over the past two years on three tracks: one, licensing (mobile money/wallet issuing and acceptance licenses); two, being deliberate and focused on building the right relationships with the regulator and the local banks, making sure we’re fully licensed and regulated; three, building the whole stack, setting all our integrations end-to-end and passing a certification with the local switch,” he said.
Raseedy was Egypt’s first independent mobile wallet, and Marco was one of the founders of the company before Axis. In 2020, he took a position with the unicorn startup MNT-Halan, where he held multiple responsibilities in strategic finance and digital transformation until early 2021, when he decided to leave the company.
Ahmed Ragab and Nada Abdelnour, the co-founders of Axis, both come from backgrounds in the fintech industry, just like Marco.
Prior to joining the company as its Chief Technology Officer, Ragab held the position of Vice President of Engineering at Raseedy and served as an engineering consultant for IBM Egypt. Prior to taking on his current role as chief growth officer, Abdelnour worked in a variety of product roles at PayPal subsidiary Zettle, Yahoo, and African fintech Yoco.
The majority of African economies are driven by small enterprises; in Egypt alone, there are 8 million SMEs, and they are responsible for 80 percent of the nation’s GDP (which is greater than $400 billion) and employ more than 20 million people.
These are typically very small enterprises that rely largely on cash transactions but have limited access to internet banking services, payroll processing, and funding for working capital. Over sixty percent of them still pay employee wages in cash, and they pay their suppliers in cash or cheques, despite the fact that this practise has a number of problems, ranging from financial exclusion to fraud
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How Axis assists small businesses
The majority of fintech in Egypt, with solutions like MoneyFellows, Telda, Sympl, and others, centred on the customers’ ability to participate in the financial system. This was the case despite the obvious necessity to digitise the payments and flow of money for small enterprises. “No one is servicing SMEs when it comes to banking in general,” Marco spoke on the strategy Axis is utilising in the Egyptian financial technology business.
Small businesses that pay their employees in cash lose an estimated 192 hours of productivity every year, according to the chief executive. This includes the time spent acquiring cash and the time spent paying staff. Establishing bank accounts to simplify and optimise payroll processing can be a time-consuming and costly endeavour for these types of organizations.
In most cases, they also need to keep track of pay advance requests manually and may be forced to lend their employees money, which negatively impacts their company’s cash flow.
Marco claims that carrying cash is a burden and potentially risky for employees, the majority of whom are members of Egypt’s financially excluded population (approximately 65% of the adult population). Paying for things with cash involves paying for them in person as opposed to the convenience of paying for things digitally.
According to him, the platform offered by Axis gives these companies an option to consider. By using axisPay mobile wallets, it helps them streamline payments to their employees as well as their suppliers.
They are able to transmit wages, reimburse expenses, carry out expense management, earn cashback, and offer earned wage advances to their employees on their wallets, which in turn enables their employees to access a variety of financial services, including funds transfer, bill payment, online shopping, and payments via QR codes.
In Egypt, financial technology companies such as Khazna and NowPay provide earned wage access (EWA) services, which poses some competition for Axis, which entered the market at a later stage.
However, the creators of Axis believe that their EWA is distinct from the other companies since it targets small businesses and employees who do not have bank accounts or who have inadequate bank accounts. This makes it distinct from the other players because they target enterprises with primarily banked employees.
“Think of us like an M-Pesa for small businesses in Egypt. We help these small businesses that are heavily cash reliant and pay their employees, suppliers and B2B payments in cash and provide digital payments alternative for them. We’re also solving a consumer pain point and tackling financial inclusion both ways,” said Abdelnour on the call. “In the future, consumers will be able to receive remittances from abroad to their mobile wallet and we’re partnering with a few remittance players abroad to be able to enable that.”
“We want to position ourselves in a way that makes our solution a lot more sticky and costly to switch from. If you’re doing payroll with us, running B2B payments, we also want you to take working capital from our platform,”
Marco said about the lending product Axis intends to launch by year’s end. “All this we’re doing closely with the regulator to follow the country’s national strategy of digitization, reducing cash, empowering small businesses and growing the economy.”