Egyptian fintech Ash has launched its digital payment platform in the North African market after obtaining a license from the top bank, Central Bank of Egypt (CBE), for its open-loop mobile wallet, axisPay, which offers a digital banking alternative for small businesses and their employees.
This comes nearly 18 months after the startup received an $8.25 million seed investment co-led by Tiger Global, Sawari Ventures and Raba, with participation from Firstminute Capital and RaliCap; founders of Venmo, Rho Banking and Cred; and Revolut and Plaid executives.
Axis has been in stealth, calling in regulators and obtaining the necessary licenses for operations, co-founder and CEO Jacques Marco TechCrunch told me in a recent interview. ‘We have focused on three tracks over the past two years: one, licensing (issuance and acceptance licenses for mobile money/wallets); two, being intentional and focused on building the right relationships with the regulator and local banks, making sure we are fully licensed and regulated; three, building the whole stack, setting up all our integrations end-to-end and getting certified with the local switch,” said the CEO.
Before Axis, Marco co-founded Raseedy, Egypt’s first independent mobile wallet. He moved to unicorn startup MNT-Halan in 2020, where he held various roles in strategic finance and digital transformation before leaving in early 2021. Like Marco, the co-founders of Axis Ahmed Ragab And Nada Abdulnour have a fintech background. Ragab, the startup’s chief technology officer, worked as VP of Engineering at Raseedy and was previously an engineering consultant at IBM Egypt. Chief Growth Officer Abdelnour held various product roles at PayPal subsidiary Zettle, Yahoo and African fintech Yoco.
Small businesses power most African economies; in Egypt, there are 8 million SMEs and they contribute to 80% of the country’s GDP of over $400 billion and employ over 20 million people. These small businesses are largely cash-based and have little access to online banking, payroll processing, and working capital financing. More than 60% of them still pay employees’ salaries in cash, and suppliers in cash or check, with defects ranging from fraud to financial exclusion.
Despite the blatant need to digitize small business payments and cash flow, the bulk of fintech in Egypt, with solutions from MoneyFellows, Telda, Sympl and others, has focused on consumer financial inclusion. “No one caters to SMEs when it comes to banking in general,” Marco said of Axis’s piece on Egypt’s fintech market.
According to the chief executive, small businesses waste an estimated 192 hours a year paying their employees in cash, from sourcing to paying employees. Meanwhile, setting up bank accounts to streamline payroll is somewhat cumbersome and expensive for these companies. She are also usually burdened by manually keeping track of requests for salary advances and loaning money to their employees at the expense of cash flow.
For workers, most of whom are part of financially excluded Egypt (about 65% of the adult population), Marco claims that carrying cash is a hassle and potentially unsafe; paying cash for things means paying for things in person as opposed to the convenience of paying for things digitally.
Axis’ platform offers an alternative for these companies, he says. It helps streamline their payments to employees and suppliers through AxisPay mobile wallets. They can send salaries, reimburse expenses, manage expenses, earn cashback and offer earned wage advances to their employees on their wallets, in turn giving employees access to a range of financial services: transfer money, pay bills and shop online and QR code payments.
Fintechs such as Khazna and NowPay offer Earned Wage Access (EWA) services in Egypt, competing with Axis, a later entrant. However, the founders of Axis argue that their EWA differs in that it focuses on small businesses and employees without a bank/underbank, as distinct from the other players who focus on companies with predominantly bank employees.
“Think of us as an M-Pesa for small businesses in Egypt. We help these small businesses that rely heavily on cash and pay their employees, suppliers and B2B payments in cash and offer them an alternative to digital payments. We are also solving a consumer pain point and addressing financial inclusion in both directions,” said Abdelnour on the line.
“In the future, consumers will be able to receive remittances from abroad to their mobile wallets and we are working with some of the remittance players abroad to make that happen.” The startup worked together with Visa for this mobile wallet and virtual card and with Fawry to enable customers to pay in and out of money through the Egyptian fintech giant’s network of 250,000 agents in MENA’s most populous country.
Axis has now launched its platform in beta for more than 100 small businesses (in various industries such as food and beverage, retail, tourism, construction and healthcare) and the 5,000 employees it has hired unnoticed. said Marco Axis expects to close the year with 5,000 small businesses and 80,000-100,000 employees as the “well-capitalized” fintech continues to iterate and improve its offerings, including a loan product that taps a 15 billion SME funding gap in Egypt.
“We want to position ourselves to make our solution a lot stickier and more costly to move from. If you do payroll and B2B payments with us, we also want you to get working capital from our platform,” said Marco about the loan product that Axis plans to launch by the end of the year. “We are doing all this closely with the regulator to follow the country’s national strategy of digitization, reducing cash, empowering small businesses and growing the economy.”