Net1 says it has entered into a partnership with contactless payments technology company Zapper, to launch ZappGroup Africa, focussed on deploying a universal white-label QR payment solution across the continent.
Zapper currently boasts more than a million customers and has operations in South Africa, the United Kingdom and the United States.
A newly formed entity called V2 Limited, will be an Africa-focused technology provider. Net1 has acquired a 50% interest in V2 for $5 million, and will commit an additional $5 million towards working capital funding over a period of time.
V2 will have access to license Zapper’s QR payment technology as well as Net1’s various payment solutions such as UEPS/EMV and mobile virtual card. V2 Limited owns 67% of ZappGroup Africa, which has a perpetual exclusive license for Zapper’s proprietary QR technology across key African countries, including Nigeria, Ghana, Kenya and Tanzania.
Zapper will own the remaining 33% of ZappGroup.
“We intend to change the face of payments across Africa through innovative payment solutions,” said Herman Kotze, CEO of Net1. “Traditional banks have struggled to service the unbanked population due to limited infrastructure and the high cost of providing last mile connectivity.
“By leveraging Net1’s existing technologies together with Zapper’s mobile solutions, we can address the needs of 70% of Africa’s population currently underserved by financial institutions. QR payments have transformed China’s payments landscape over the past five years, and we believe our joint efforts will have a similar effect across Africa,” he said.
QR payments currently dominate the payments landscape in China with players such as WeChat and Alipay boasting of hundreds of millions of monthly active users. Mobile and QR solutions in particular are also leapfrogging traditional and card-based solutions in emerging countries across Asia, Net1 said.
The vast majority of Africa’s 1.3 billion people are unbanked, and this market remains one of the largest untapped opportunities for fintech players like Net1, it said.
ZappGroup will target key regions across West and East Africa, from which regional hubs will be created for further rollouts. West Africa will be the initial focus, with launches targeted in both Nigeria and Ghana.
According to Net1, ZappGroup has signed letters of intent and expressions of interest with some of the largest operators and key industry players across the region, and is targeting its first country launch in fiscal Q2 2019, followed by a second country launch in the second half of fiscal 2019.
V2 will be led by Barry Lobel as chief executive officer, and Paul Edwards as chairman of the board. Net1 will be actively involved with the management of V2, and will also have two representatives on the board.
Lobel has over 15 years’ experience restructuring and building small-to-medium sized businesses with specific focus in Africa. Most recently, he was responsible for the restructuring of various payment and e-money platforms across Europe, Africa and South America.
His former roles include executive director and CFO of Atlas African Industries, director of finance at Partners Capital, and co-head of Private Equity at RP Capital.