African fintech holding company Crossfin Technology and Apis Growth Fund, a private equity fund managed by Apis Partners, have acquired card-payment solutions firm Sureswipe.
The acquisition will see the three financial services providers collaborate to form Crossfin Transactional Solutions (CTS).
Crossfin invests in high growth and established cash-generative businesses, while Apis Partners is a private equity asset manager that supports growth stage financial services and financial infrastructure businesses in Africa and Asia, by providing them with catalytic growth equity capital.
In July, Crossfin announced a partnership with Apis, aimed at transforming the local payments acceptance market. Through the collaboration, both partners said they would drive financial inclusion to SMMEs and informal merchants in Southern Africa.
Studies have found that 46% of banked low-income earners in SA tend to use cash as a result of limited card acceptance at micro-merchants, particularly in rural and peri-urban communities where there is no alternative to cash, according to Crossfin.
The acquisition aims to provide financial services, a key enabler for any emerging economy.
“Although the three strong brands have been consolidated under one entity, they will continue to operate independently within their distinctive markets,” says Sureswipe MD Paul Kent.
“We believe each provides a distinctive client solution. By layering a common shared services platform across the three businesses, CTS will provide merchants a ‘one-stop shop’ to help them grow their business.”
Sureswipe is a local financial technology company that has brought card-payment systems to small local businesses since 2008.
The Crossfin group owns stakes in several companies in the fintech industry, including Innervation, WiGroup, Emerge Mobile, Alacrity and Blue Garnet Ventures.
Isaac Mophatlane, former BCX CEO, joined Crossfin as a non-executive director in December 2017.
Crossfin has been on an acquisition trail over the past few years.
Last month, it acquired a stake in insurtech start-up Nobuntu, for an undisclosed amount. Nobuntu brings affordable pension savings products to lower income workers.
In March, Crossfin announced an undisclosed investment in Retail Capital, a South African provider of alternative business funding to SMEs.
The investment aimed to provide Crossfin with opportunities to augment and improve the delivery of fintech products and services to the underserved merchant market.
In 2018, Crossfin snapped up another firm when it acquired a majority stake in payments enablement firm Crossgate. This followed Crossfin's partnership with Investec to identify early-stage fintech businesses.
“If we are to accelerate the migration of South African consumers to a cashless and financially inclusive society, the payments industry must focus on improving accessibility to payment channels, and educate consumers and merchants on the true costs and dangers of cash,” Kent notes.
CTS says it is among the largest independent merchant acquirers operating in SA, servicing over 25 000 active clients, 50 000 active card machines and $5 billion in transaction value. The company will have operations in seven African jurisdictions.
Crossfin CEO Dean Sparrow says the collective scale of CTS gives each company the benefit of cross-leveraging best practices, market opportunities, products, services and distribution.
“We see the companies working together to address the different tiers of the South African payments market comprehensively, with a value proposition that will be very beneficial to their respective clients, as well as provide sufficient resources to develop best-of-breed technologies that can be brought to market faster than at present.
“With Apis’s valuable international network and strong capital backing, we’re confident we can make significant inroads into establishing a more inclusive and supportive payments ecosystem for the informal and formal markets, both here and into the rest of Africa,” notes Sparrow.
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