Zambia’s first YC-backed startup enables companies to generate virtual cards — Quartz Africa

The rise of e-commerce on the continent, plus greater access to global supply chains, presents enormous upside for both buyers and sellers. But taking advantage of that upside still often requires access to bank-underpinned debit and credit cards.

In Zambia, only 10% of the adult population use a debit card.

In 2021, Perseus Mlambo and Alessandra Martini—an entrepreneur couple—founded Union54, Zambia’s first Y-combinator backed startup, as a fintech spinoff from Zazu, a challenger bank they set-up about six years earlier. Challenger banks are niche specialists that offer distinct tech-backed financial services not available at major or legacy banks.

Union54 was set up in reaction to the challenges that Zazu experienced. Relying on legacy banks to create debit cards for its users, Zazu often faced lengthy delays and other challenges emblematic of dominant legacy banks’ failure to expand financial inclusion.

Union54 developed a card-issuing application program interface (API)

Union54 found a simpler way: software that enables other fintechs and companies to generate their own cards in physical or virtual format. “Our approach is unique in that for the first time ever all of these fintechs that have done really well in their home countries can do an integration with Union54; they can wake up and offer their customers a debit card,” Mlambo says. “We are also able to process virtual debit cards for online and e-commerce payments. We occupy a really unique position in that we allow all of these fintechs to be able to introduce debit cards.”

Union54, which raised $12 million in a seed extension round in April, says 100-plus fintech companies and 20-plus websites are using its software. Mlambo says the latest funding will be used to expand beyond Zambia.

Mlambo believes in the unbundling of banking, and debit- and credit-card access for all African consumers saying, that the opportunities lie even beyond simply regular e-commerce.

“Remittances companies are also interested in enabling people who receive money from abroad to get physical credit cards, [which] they can link to their platforms to enable recipients to buy groceries and other cards for their websites.”

Union54’s ambitions are regional with the name representing the unification of Africa’s 54 nations.

Mlambo says, “We don’t see Zambia as the only market for us. We see the whole continent as a potential market.”

Virtual credit and debit cards are making inroads in Africa

One of Africa’s largest telcos, Safaricom, launched a virtual card in partnership with Visa in June. This virtual card will allow customers of M-Pesa, a Safaricom joint venture, to send or receive payment from almost anywhere in the world. Safaricom is one of Africa’s mobile-money frontrunners, with over 30 million customers and a network of 3.2 millions businesses that accept M-Pesa.

For many financially excluded Africans, including those living outside urban centers, virtual credit cards may also be the only option available. That makes developing them a win-win situation for startups and potential customers.