An Africa-focused tech company, Stax, has raised $2.2 million in a new funding round co-led by U.S.-based VC firms, World Within Ventures and Noemis Ventures, joining present investors like Anthemis Group, Orange DAO, 500 Startups, Garuda Ventures and GAN Ventures.
Stax is an African technology startup that allows Africans buy airtime, send and request money, and transfer funds between accounts via automated USSD codes.
The company was founded by Ben Lyon, Jess Shorland and David Kutalek.
Stax works like a resources centre with its app that fetches codes from multiple accounts that users can access offline. Users on the app can perform transactions without having to dial any USSD code.
Speaking about the fundraising, Ben disclosed: “Stax is all of your bank accounts, mobile wallets, crypto in a single app that works without mobile data. What we’re trying to respond to is tap into this recognition that you have about 300 million smartphone owners across Africa, who have a strong preference to transact via USSD instead of apps because they keep their mobile data turned off.”
As the population in Africa continues to grow, the need for more channels for transactions becomes more important. USSD technology plays an important role in a market where internet-enabled app-based banking can reach well over 300 million subscribers on the continent.
USSD technology, however predominantly offline, is used by many in Africa – mainly by feature phones – and this technology plays into inclusion for underserved groups and communities. With Stax’s technology people from anywhere can send and receive money, pay for bills and buy data offline, and reports say more than 90% of digital transactions in sub-Saharan Africa are performed on with USSD.
In Africa, telecommunications and banks dominate the USSD market, providing the tech infrastructure that facilitates the use of code-based transactions. However, while the USSD comes as innovative, this innovation also comes with its unique challenges. In Nigeria, for example, the average banked customer has three to five bank accounts and the challenge here would be having to memorise one or two USSD codes to make online transactions as opposed to using an app to carry out transactions.
