Scale, an emerging South African startup specializing in brand and project management services tailored for fintech companies aiming to penetrate new markets or develop new product lines, has successfully secured $700,000 in a pre-seed investment round. The funding round was spearheaded by 54 Collective, a versatile venture capital firm with no specific industry focus, and First Circle Capital, which has a keen interest in fintech ventures. Additional contributions came from Sunny Side Venture Partners and several individual angel investors.
Founded a year ago by Barbara Woollams and Miranda Perumal, who previously held a directorial position at Visa, Scale not only offers its expertise in brand and project management but also facilitates strategic partnerships with payment infrastructure providers for fintech companies. The newly acquired funds are earmarked for the expansion of Scale’s operations into Kenya, Zambia, and Cote d’Ivoire.
A significant focus of this expansion is to enhance the distribution and adoption of Scale Execute, a versatile card-issuing solution that Scale developed in collaboration with Visa and Mastercard. This development occurs at a time when many African fintech companies are reconsidering their reliance on card services due to the diminishing profit margins caused by the high costs associated with processing payments through complex partnership networks.
Another challenge plaguing the card payment sector is chargeback fraud. In 2022, notable African fintech firms, including Eversend and Busha, had to scale down their card services and switch providers following Union54, a Zambian fintech known for its virtual card-issuing API, ceasing its card services due to a 600% surge in attempted chargeback fraud cases on its platform.
Nonetheless, Scale’s decision to venture into the Ivorian market is strategic, considering Cote d’Ivoire’s leading position in West Africa regarding card issuance, with Ivorian banks issuing approximately 2.4 million cards in 2022.
CEO Perumal expressed optimism about the future, highlighting the support from their investors and partners as a cornerstone for accelerating ecosystem engagement, building trust with African businesses, and addressing the significant challenges associated with enabling card rails by providing unparalleled, top-tier services.
Despite the prevailing dominance of cash transactions in several African markets, Scale is optimistic about the potential of its card issuance services, given the anticipated growth of the continent’s fintech sector, which is expected to surge to $230 billion by 2025. Furthermore, by 2029, card issuance platforms are projected to account for about 35% of all card-based transactions.
In the competitive landscape of B2B card issuance, Scale is set to rival entities like Onafriq. Hetal Patel, the Chief Investment Officer at 54 Collective, praised the Scale team for its dynamic leadership, deep industry knowledge, and proactive approach, expressing excitement about Scale’s potential to become an indispensable resource for fintech companies.
