South-African startup Scale raises $700,000 to help fintechs issue cards

Scale, a South African startup that provides card issuing orchestration to fintechs has raised $700,000 in pre-seed funding. Its platform connects fintechs to banks, issuer processors, KYC and payment networks, enabling them to launch cards faster.

54 Collective, a sector-agnostic venture capital firm, and fintech-focused First Circle Capital, led the pre-seed round. Sunny Side Venture Partners and some angel investors also participated.

The one-year-old startup founded by Barbara Woollams and Miranda Perumal, a former director at Visa will use this funding to expand its API product to Kenya, Zambia, and Cote d’Ivoire.

This comes during a period when African fintechs are second-guessing card services as the cost of processing payments through multi-layered partnerships eats into margins for them. Scale says its product can reduce the costs of prevailing card-issuing models.

Chargeback fraud is another headache in the card payments industry. In 2022, African fintechs like Eversend and Busha briefly scaled back their card operations and had to change providers after Union54, a Zambian fintech that provided a virtual card-issuing API, discontinued its card services as attempted chargeback fraud cases on its platform rose by 600%.

However, expanding into a market like Cote d’Ivoire makes sense for Scale, as the country ranked first in West Africa in card issuance. Ivorian banks issued about 2.4 million cards to customers in 2022.

“With the backing of our esteemed investors and partners, we are well-positioned to expedite our ecosystem engagement, build trust with African businesses and continue to strongly focus on solving major pain points when enabling card rails by delivering unrivalled, world-class service,” CEO Perumal said in a statement.

Though cash remains a dominant payment method in some African markets, Scale is betting its card issuance service on the continent’s growing fintech market, projected to reach $230 billion by 2025. By 2029, card issuance platforms are also expected to issue about 35% of all cards used in payments. 

Scale will compete with B2B card issuers like Onafriq.

“The Scale team, led by a rockstar female founder [with] deep sector expertise and proven bias toward action truly excites us, and we look forward to seeing Scale become a critical enabler for fintechs,” said Hetal Patel, chief investment officer at 54 Collective.

Editor’s note: This article has been edited to specify that Scale orchestrates “card issuing” in a way that speeds up product launches and not “card customising” as broadly stated in a previous version. It has also been edited to reflect that Scale does not offer brand and project management services as a standalone product.

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