South African fintech firm Stitch has secured $25 million in additional funding, positioning itself as a significant player in the payments sector within the realm of open banking. Leading this funding round is Ribbit Capital, a global fintech investor, with participation from existing investors including CRE Ventures, PayPal Ventures, and the Raba Partnership.
Headquartered in Cape Town, Stitch has carved a niche by offering a comprehensive “end-to-end payments solution” tailored to address the complex and evolving payment needs of enterprise clients. The company’s core mission is to empower businesses by facilitating the development, enhancement, and expansion of their financial products. This is achieved through the provision of vital API (Application Programming Interface) gateways that boost online payment conversion rates and streamline payment operations for clients.
Open banking, characterized by traditional banks sharing their data via APIs, has transformed the global payments landscape over the past decade. Africa has embraced this innovation, with businesses using APIs to access customer financial accounts and offer a wide array of integrated and embedded financial services.
The recent injection of $25 million brings Stitch’s total Series A funding to an impressive $46 million. The company sees this as a testament to its commitment to drive innovation and growth in the open banking and payments sector. As open banking continues to reshape the financial services landscape, Stitch’s strategic position and fresh funding are poised to make a significant impact in the industry.
Ribbit Capital Takes the Lead
Ribbit Capital, a global fintech investor, is making its presence felt in Africa with its third investment on the continent, leading the $25 million extension funding round for Stitch. This follows Ribbit Capital’s leadership in funding rounds for companies like Chipper Cash and Wave.
Kiaan Pillay, Co-founder and CEO of Stitch expressed gratitude for the support received from both local and international backers since the company emerged from stealth mode in 2021. While early investors shared the vision of tapping into a vast market opportunity, Pillay acknowledged the importance of demonstrating robust growth figures as the company enters a growth phase, especially in a period of venture capital slowdown.
Pillay emphasized that strong traction and existing relationships played a pivotal role in attracting Ribbit Capital as the lead investor and successfully closing the funding round. He highlighted the significance of concrete results for investors like Ribbit, whose team had been familiar with Stitch for some time.
Stitch on Evolution and Expansion
Stitch has evolved from a quasi-data and quasi-bank-to-bank payments platform into a full-fledged payment service provider. The company’s offerings now encompass the ability for customers to accept payments through various methods, manage and reconcile payments across multiple channels, providers, and geographies using the PayOS dashboard, and efficiently disburse funds.
Primarily catering to enterprise businesses in South Africa, Stitch boasts a client roster that includes MTN, Multichoice, the Foschini Group (TFG), Standard Bank’s SnapScan, and Yoco. However, it also serves startups and small businesses in Nigeria and other African nations where it holds licenses. Stitch competes with rivals like Mono, Okra, Revio, and MoneyHash while collaborating with global payment service provider partners and exploring potential partnerships with global consumer internet companies.
“We moved away from being a single-method platform to a next-generation PSP for local and global enterprises,” said the CEO, Kiaan Pillay. Stitch’s transformation includes providing a comprehensive payment solution, including managing payment methods across different banks and handling payouts such as disbursements, refunds, and withdrawals.
Stitch’s value proposition shines, especially when addressing the need for alternative payment methods in regions where card usage is less prevalent. The company’s product features were developed in response to the demands of local enterprise clients and are adaptable to the needs of global clients, making Stitch a versatile player in the payment space.
Pillay summarized, “We find ourselves operating in a space that was somewhat unexpected for us. However, due to significant demand from prominent merchants for additional products, it has become a more accessible arena for us to enter and expand within.”
Beyond its open banking capabilities, Stitch distinguishes itself by establishing direct connections with banks and networks, eliminating intermediaries.
In addition to offering open banking capabilities, it provides customer support, localized insights into the payment landscape, and tailored solutions to simplify fund management processes.
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