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Fintech holding firm Crossfin buys into Retail Capital

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Anton Gaylard, chief operating officer and co-founder of Crossfin.
Anton Gaylard, chief operating officer and co-founder of Crossfin.

African fintech holding company Crossfin Technology has invested an undisclosed amount in Retail Capital, a South African-based provider of alternative business funding to the SME sector.

According to Crossfin, the deal consists of a "significant minority interest" in Retail Capital.

Anton Gaylard, chief operating officer and co-founder of Crossfin, says the investment provides Crossfin with opportunities to augment and improve the delivery of fintech products and services to the underserved merchant market.

"We believe in innovative companies that focus on solving specific everyday pain points that are not adequately covered by existing products in the market. Retail Capital has built a reputation and track record as an invaluable partner to local merchants that remain underserved by the traditional financial services system.

"A healthy partner ecosystem - including with some of Crossfin's existing and prospective portfolio companies - also creates exciting opportunities to integrate a broad suite of financial products and services to support local merchants on multiple levels," says Gaylard.

In October last year, Crossfin acquired a majority stake in payments enablement firm Crossgate. This followed Crossfin's partnership with Investec to identify early-stage fintech businesses and the establishment of a new payments operating company with global private equity firm Apis Partners for the advancement of a cashless society in SA and Africa.

The Crossfin group owns stakes in several companies in the fintech industry, including Innervation, WiGroup, Emerge Mobile (including iKhokha), Alacrity and Blue Garnet Ventures. Its portfolio companies process more than $4 billion in point-of-sale (POS) transactions and $500 million in mobile transactions annually across more than 9 000 retail stores with over 110 000 POS lanes and 13 500 mobile POS merchants in seven African countries.

Isaac Mophatlane, former BCX CEO, joined Crossfin as a non-executive director in December 2017.

Karl Westvig, CEO of Retail Capital, says the investment will support the company as it accelerates the development of its distribution channels.

"We have an already established partnership with Crossfin through which we provide merchants with instant automated access to short-term funding through their mPOS devices. We've seen very high take-up rates and great customer satisfaction among business owners accessing funding in real-time at any time of day."

Westvig adds the majority of merchants and small business owners using mPOS devices are new to accepting debit and credit cards.

"These are typically what we'd classify as informal businesses who have never had access to finance. By using their monthly transaction data, we can provide appropriate funding access to businesses with turnovers as little as R10 000 per month, driving true financial inclusion in a major part of our market that is not adequately covered by the banking sector.

"Overall, we expect to provide funding of R600 million to more than 6 000 SMEs in 2019, and expect a multiplier effect that will create 3 500 jobs," says Westvig.

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