Union54, a Zambian fintech startup that issues cards through an integrated application programming interface, has raised $12 million in seed extension.
Leading the round was Tiger Global, an American investment firm which previously led Union54’s $3 million seed round. Other participating investors in this financing round include Vibe VC, Earl Grey Capital and Packy Mccormick’s Not Boring Capital.
Union54 launched in 2021 and quickly became a cohort in the Y Combinator S21. Founders Perseus Mlambo and Alessandra Martini started Union54 in an attempt to create a homegrown alternative to Mastercard or Visa.
Union54 provides an API for any company to issue virtual and physical cards without a bank partner or processor. Its easy-to-integrate API technology is aimed at giving companies access to card-issuing without the hassle of compliance.
CEO Perseus Mlambo revealed 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.
Union54 claims to have issued slightly over half a million virtual debit cards to its customers as well as having processed volumes in millions of dollars.
The recent pulling out of Visa and MasterCard in Russia was an eye-opener to the disadvantages of having foreign companies be leaders in card issuing.
“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.
“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 payment route that needs to be developed locally for local use.”
Union54 is working at building a relationship with merchants so as to eliminate the doubts and reservations merchants might have with the startup. The company plans to get nine central banks to establish this framework by the second quarter of 2023.
