Kenya’s BitPesa has raised $5m from Japanese insurance group Sompo Holdings in a move expected to revolutionize cross-border payments and insurance services globally.
Sompo will use Bitpesa’s technology to extend its presence in the international remittance service market and use it for its insurance services. The two firms aim to solve international remittance and cross-border payment obstacles by reducing international remittance fees and lengthy processing times to facilitate global trade and contribute to macro-economic development.
Using virtual currencies, Sompo and BitPesa will resolve the problems of expensive exchange fees and reduce long processing times. With this in mind, the firms plan to revolutionize the way businesses and individuals make financial transfers across borders. This is not BitPesa’s first Japanese deal. In September, BitPesa partnered with Japan’s remittance firm SBI Remit to make it easier for Africans to buy Japanese products and reduce friction, improve efficiency and interoperability for cross-border payments between Japan and Africa.
According to Elizabeth Rossiello, founder and CEO of Bitpesa at that time: “Our fees are much lower than most banks’ transfer fees.” In addition, the transfer happens much faster than the two weeks it would take most banks, depending on the amount. Using SBI Remit’s payout network, we transfer the money to SBI Remit, and they can pay out to their large Japanese network. There is a flow of funds by Africans to Japan.”
The two firms said they would focus on industries such as Japanese used car dealers, Japanese cosmetics and electronics and used cars. The deal aims to simplify cross-border payments and reduce the forex risk between Japanese exporters and African buyers. BitPesa has operations in Kenya, Nigeria, Tanzania, Uganda, Senegal and the Democratic Republic of the Congo, markets which heavily import from Japan.
The deal was signed after Bitpesa had acquired TransferZero, an international, online money transfer platform that specializes in sending money to consumers and companies in 200 countries using over 50 different currencies. Founded in May 2016 by Luis Cambronero, TransferZero is licensed by the Bank of Spain as an authorized payment institution and is a partner of Bankia, Spain’s third largest bank and has pioneered a number of innovations in the European FinTech sector.
TransferZero also has network integrations on four continents, and a team with decades of experience working with enterprise clients in need of global payment solutions. They are the only remittance company that does not charge a fee, aside from a small percentage in the FX. All these deals are important for Sompo.
Sompo Holdings will utilize BitPesa’s technology and, through various pilot programs related to treasury and settlement services, seek to enhance its presence in the international remittance market while applying the same technology to the insurance sector.
Apart from Japan, BitPesa had in the past revamped its platform to make global FX payments easier, safer, and more efficient and introduced transfers between Africa and China. By relying on BitPesa to send or receive payments faster and cheaper and in local currencies between China and Africa, BitPesa was creating its own money remittance web across various continent. And who knows how fast BitPesa will create a global web cheaper and with a wider reach more than legacy players MoneyGram and Western Union?
If the Japanese media reports are anything to go by, the $5.02 million raise from Sompo will add to BitPesa’s $7.6 million to make a $12.62 total with + $2 million to make $14.62 million in total raised. In August 2017, BitPesa raised $4m in a follow-up to its Series A funding round led by Greycroft, a majority of existing shareholders and another new investor, Plug and Play joined the round. In February the same year, the firm closed a $2.5 million Series A round led by Draper VC, Greycroft Partners among others. In 2015, BitPesa closed a follow-on round of $1.1M led by Pantera Capital Management LP, Crypto Currency Partners LP, among others.