Zambian card issuing fintech Union54 has raised $12 million in a seed extension round led by Tiger Global. Other participating investors in this financing round include existing ones such as Vibe VC and new investors Earl Grey Capital and Packy Mccormick’s Not Boring Capital.
It’s been only six months since Union54, whose API allows African software companies to issue and manage their debit cards without needing a bank or third-party processor, announced its seed round of $3 million, also led by Tiger Global.
Union54 founders launched the company last year when they went through painstaking processes to issue debit cards for their previous startup and challenger bank, Zazu.
Since its launch in October and participation in Y Combinator’s summer batch 2021 earlier, Union54 has grown to issue slightly over half a million virtual debit cards to its customers. The company also claims to have processed volumes now reaching double digits in millions of dollars.
CEO Perseus Mlambo disclosed that Union54’s revenue in its first month (October) was a little less than $3,000. In November, the company’s revenue increased by 600% and has subsequently grown 50% month-on-month.
“What this is telling us is that there’s very much real interest in the number of people who want to have debit cards and this is not going to stop anytime soon,” Mlambo said in an interview.
“What’s more, our interactions with customers and potential customers have shown us that the real problem we are tackling isn’t the ease of issuing cards– rather, it’s much broader than we could have imagined.”
Union54 hopes to create a homegrown alternative to Mastercard or Visa. In addition to helping merchants solve their settlement and sourcing issues, Mlambo offered more insight into why the company chose to ply this route. According to him, recent global events like Visa and Mastercard pulling out from Russia, leaving China’s UnionPay to fill in the void, have made it evident that payments are a politicized endeavor.
“The purpose of creating another card network is an inspiration of what’s happening right now. Number one, we’re vulnerable and hostage to any political decisions that might affect trade on the continent. And if anything were to happen, we would wake up and would not have access to our funds,” said Mlambo, who founded the company with his spouse and COO Alessandra Martini.
“Number two, when you think about the card networks today, they’re not fit for African merchants because settlement is often taking three days for a local debit card, maybe it’s taking over seven days for an international debit card. There’s a significant opportunity as the world realigns itself; we need to get to a point where we’ve got a payments route that needs to be developed locally for local use.”