South Africa Busting Out With E-Payment Platforms
South African tech entrepreneurs are creating exciting technology in the areas of smartphone payments, financial services and manufacturing despite scant funding opportunities.
Duncan McLeod, editor of TechCentral, did a roundup of some entrepreneurial efforts he describes as “genius.”
“Despite all the doom and gloom that is our politics, and despite the poor state of our education system, there are pockets of genius shining through everywhere, showing that South Africa can still compete with the best in the world,” McLeod said.
Durban start-up Emerge Mobile is one example. The company, founded two years ago by father and son team Clive and Matt Putman and Ramsay Daly (Matt and Ramsey attended Hilton College in KwaZulu-Natal together) has developed a mobile point-of-sale terminal that allows merchants to accept card payments using smartphones.
Matt and Daly admired what U.S. startup Square, founded by Jack Dorsey, had done in the field and contacted the company wanting to represent it as its agent in South Africa. When they were told that Square had no immediate plans to expand in Africa, the pair, together with Clive Putman — the technical brains behind the venture — started building their own solution, TechCentral reports.
Clive, a successful IT industry professional in Durban, was all-but retired when he was roped into the venture, McLeod said. His background in cryptography and hardware development was key to Emerge Mobile. “Clive looked at it and said he could do it. All we had to do was learn about the rest of the payments industry,” Daly said only half joking, McLeod reports.
Capital Eye Investments, a private equity business that emerged from the UCS Group, funded the start-up. The prototype was put through the rigorous and complex process of achieving international technical accreditations. This was no mean feat.
It’s tough as a small South African startup, Matt said. Unlike Silicon Valley, there isn’t much venture capital cash to be had, and mentorship is hard to find.
Emerge Mobile is talking to banks in Africa and has plans to expand to other emerging markets. In the coming months it intends to offer its own branded retail solution in the South African market.
Emerge Mobile isn’t the only company developing a smartphone payments platform like this. Well-known tech entrepreneur Stafford Masie is also developing a solution through his company Thumbzup, which should be launched in South Africa soon through partner bank Absa.
South Africa has a rich history of innovation in technology around financial services, McLeod reports. Stellenbosch-based Entersekt is doing “incredibly geeky stuff” in banking and payments security and is being noticed on the world stage.
Fundamo, a Cape Town-based mobile payments company founded by former Sanlam Group chief information officer Hannes van Rensburg, was snapped up by Visa in 2011 in a blockbuster $110 million all-cash deal.
South Africans’ ingenuity in technology is not limited to financial services.
Thabo Lehlokoe, founder of Midrand-based Seemahale Telecoms, is about to debut the first South African-manufactured smartphones and tablets. The company, which will build the devices at a factory in Boksburg, plans to offer two smartphone models and two tablets this year. The first products are expected to go on sale within months.
Seemahale is importing printed circuit boards it will use to make the devices. Placement of all the components, the housing assembly, the manufacture of cables and accessories, and the printing of manuals and packaging is being done in South Africa, said McLeod.
The smartphones will cost substantially less than high-end devices “without skimping on the specs,” Lehlokoe told TechCentral. There is a big gap in the market between ultra low-cost handsets and high-end smartphone models, he said. Consumers are looking for “decent phones with decent specs but at a much better price.”
McLeod said he has to give credit to Lehlokoe for “dabbling in a highly competitive market dominated by big international brands.”