Buy-now-pay-later (BNPL) platform Happy Pay has raised $5 million (R86 million) in seed funding, led by global tech investor Partech.
The funding round also saw participation from Futuregrowth Asset Management, 4Di Capital, E4E Africa, Equitable Ventures, Summit Deals, the University Technology Fund and Felix Strategic Investments, according to a statement.
The Cape Town-based start-up, which has more than 600 000 registered users, plans to use the capital to build what it calls an ad-subsidised payments network.
Happy Pay says the network removes interest and fees from consumer finance, shifting the cost of instalments to the merchants and brands that benefit from the resulting sales.
Wesley Billett, co-founder and CEO of Happy Pay, comments: “If we can connect the right product to the right person at the right moment and remove payment friction, commerce itself can fund the flexibility. That allows us to deliver instalment payments without charging consumers interest.”
According to the statement, central to Happy Pay’s approach is an artificial intelligence (AI)-driven advertising and distribution engine that matches merchants with high-intent shoppers in real-time. The platform draws on behavioural signals, transaction data, affordability insights and contextual cues to figure out what a user is most likely to buy, and when.
Those offers are then surfaced inside Happy Pay’s own app and pushed across partner apps, digital channels and other touchpoints, moving consumers from discovery through to checkout with instalment payments already built in.
Over the past few years, BNPL offerings have gained popularity in SA and other parts of the globe, as retailers compete aggressively to retain a larger share of the booming e-commerce market. This has seen big global firms − including PayPal, Apple, Amazon and Square − jump on the bandwagon.
Billett points out that traditional credit in South Africa remains expensive, with the average credit-active consumer spending around 28% of their net income on debt repayments.
“We believe our model changes that equation by creating value for every participant. Merchants grow sales and acquire new customers, consumers gain access to cost-free cash-flow flexibility, and we build a business designed to deliver positive, long-term impact.”
“We’ve looked at most BNPL companies across Africa, Europe and the US, and we’re clear that the best model for creating true value is the one Happy Pay has built. BNPL only makes sense when it delivers real affordability for consumers, while helping merchants improve conversion, grow their client base, build loyalty and reduce acquisition costs,” adds Matthieu Marchand, principal at Partech.
The fresh capital will also go toward expanding merchant partnerships, growing distribution across digital and physical channels, and continuing to develop the AI-driven recommendations and ads engine.
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