Encouraging financial inclusion through digital payment methods is one of the top priorities for the government of Africa’s largest technology ecosystem where cash is still king. Several initiatives launched by the government have increased the number of people who have bank accounts in their respective countries. In Egypt, for example, platforms like Fawry and InstaPay — leveraging apex bank policies to reduce cash dependency — were responsible for the spread of e-wallets and cards in the North African country where 64% of Egyptians increased their adoption of digital payments last year’s solution. The number of mobile wallets reached 46,500 per 100,000 people, according to Mastercard report.
While e-wallets and cards dominate In the digital payment landscape, Egypt’s peak bank is keen to promote another method: contactless payments, having recently passed regulations governing the tokenization of payment cards on mobile apps. However, with services such as Apple Pay, Google Pay, and Samsung Pay — which allow customers to make contactless payments with digital cards in mobile wallets via NFC (near field communication) technology — largely absent in Africa, platforms such as flash provide alternative via QR code.
Egyptian fintech, which provides cashless payment solutions to consumers and businesses through scan and pay services, has raised $6 million in seed funding led by Addition, a venture capital firm headed by former Tiger Global executive Lee Fixel. Flourish Ventures and other strategic angel investors are participating in the round, which will help the startup accelerate product development and customer and business acquisition in Egypt.
Flash, after obtaining approval from the Central Bank of Egypt to operate as a technical payment aggregator, allows customers to purchase with their mobile phones by adding their existing bank cards or digital wallets to the app and scanning QR codes presented by businesses, in stores or on delivery. In this way, businesses can accept payments without the need for the technical assignment integration typically encountered with expensive NFC-enabled point-of-sale (POS) systems.
“We eliminate the need for cash or carry cards for our customers and POS machines on the merchant side,” said Eric Gordon, co-founder and CEO of Flash, in an interview with Zero2Billions. “With QR codes, businesses don’t have to worry about integration, setup, and maintenance costs, and they’re low-tech, so anyone with a camera in their phone can pay that way.”
The inefficiencies that exist in a society as heavily cash-based as Egypt is something Gordon noticed during his time at Uber as head of market for the North African country and later the MENA region. According to the CEO, 90% of Uber trips are paid for in cash. When collected from drivers at the end of the day, this turns into piles of money being tallied in a warehouse, leading to fraud and theft.
Finding a way to stop these leaks, which are hurting both consumers and businesses within the Uber product ecosystem, was a real headache for his team. While they came up with a while, Gordon, co-founder Sherin Kabesh (another Uber alum who works as the head of marketing for the online transportation giant in Egypt), decided to take on a new challenge to build a platform that they said addressed the problems faced at Uber and also resonated with Egypt financial inclusion strategy.
Fintech, founded in 2021, provides its services in partnership with the Egyptian bank Banque Misr. In a statement, Kabesh said Flash securing license approvals and bank partnerships “strengthen our commitment to growing a cashless ecosystem, introducing new products, and diversifying our digital payments portfolio,” which includes automated bill payments and behavioral insights in spending, for example. Flash has several competitors across its products, including Telda, Khazna, and Paymob.
Ecommerce platforms and businesses whose payment methods include cash-in-place checkout — pharmacies, restaurants, fast food chains, and grocery stores — are Flash’s top customers. About 80% of items bought online in Egypt are paid for in COD, per report; Among other factors driving this, consumers prefer to receive products before paying. The problem, however, is that many businesses don’t provide a POS option for delivery. Thus, “Flash on Delivery” allows these businesses to present customers with QR codes, which can be scanned at the point of collection. While executives declined to disclose how many merchants (and end customers) use its platform, they say the two-year-old fintech aims to serve more than 100 businesses in the next 12 months. Some of its current business customers include Homzmart and Rabbit Mart.
Meanwhile, payments made on delivery or in-store are completed the next day, which, according to Gordon, “is the best on the market.” The chief executive officer said in addition to being cheaper than other forms of digital payments, next-day settlement gives Flash an advantage over current digital payment products, which take longer to complete (up to a week in most cases), and global payment methods, including Apple Pay. and Google Pay (completion can take up to five days) should they enter the Egyptian payment landscape in the future.
“It’s going to cost less business with Flash than it would with something with Apple Pay because Apple, card companies, and banks are all taking part versus the direction Egypt is going, which is similar to what happened in India where QR codes, cheaper for businesses, have been proliferated and became the standard,” said Gordon, further stating the advantages of QR codes over NFC technology. “The central bank is also opening up this network of instant payments to third parties, which also enables instant settlement. So in the long term, I think we can also do instant settlement and lower transaction fees.”
That doesn’t mean QR code technology isn’t without its drawbacks, some of which include tampering with the code or placing fake codes on top of real ones to redirect payments. So how does Flash avoid this? Usually, businesses on the platform are raised according to regulations set by CBE and Banque Misr, allowing Flash to determine if they are legit. After that, only QR codes generated by Flash (for businesses) will work with Flash apps (for customers), said Gordon. “Any money paid to a QR code can only go into that business account. Flash never touched money; it goes directly from our partner bank to the business bank account,” said the CEO. “So if someone steals the QR code, it doesn’t make sense because the money being paid is just going to the business.”
Andrew Miskiewicz, an investor in Addition, noting why the New York-headquartered company backed Flash, saying that fintech is “changing the payments landscape in Egypt, simplifying complex transactional processes for consumers and businesses with secure, easy-to-use applications. .” The fintech, which claims to process 50,000 transactions, is approaching more than 10 million Egyptian pounds (~$324,000) in cumulative transaction value. At the same time, its revenue, which was created from charging businesses a processing fee, grew 30% month-over-month, Gordon said in an interview.