Fresh from launching in India, Branch International, a micro-lending app for emerging markets has raised $170 million in Series C financing led by Foundation Capital and Visa.
B Capital, Andreessen Horowitz, Formation 8 and Trinity Ventures also participated in the round. The firm has also announced a new partnership with Visa.
Launched in India last month, Branch has added more than 30,000 users so far and aims to use this new round of capital to continue to build its presence in India as well as in Latin America. Branch now claims to be serving more than 3 million customers across its markets and has more than issued 15 million loans in Kenya, Nigeria, Tanzania, Mexico, and India.
Branch is competing Tala in both Kenya and India and OneFi in Nigeria. In India, Branch borrowers might visit a local convenience store or bank to retrieve their loan using a code sent to their smartphone. But with Visa on board, Branch will now have access to a global network of local ATMs so that borrowers will be able to withdraw funds from an ATM using “virtual” Visa credentials within that code, no physical debit debit card or bank account required.
This service will also be extended to merchants who accept Visa on mobile phones in Kenya, Tanzania, and Nigeria.
As a part of the agreement, Branch will also implement Visa payment services into its platform, to give consumers the ability to make payments using a card or a mobile phone. The move is part of Visa’s strategy to leverage mobile to digitize payments and is expected to pave the way for cash-free payments.
Commenting on the announcement, Visa’s Vice President, Strategic Partnerships, Fintech and Ventures, Otto Williams said, “Traditional barriers such as a credit score and bank account make financial accessibility a challenge for millions of people in Kenya and the region. By focusing on digitizing payments, we aim to build a more digitally inclusive ecosystem. We are confident that our collaboration with Branch will deliver on seamless access to finance for the unbanked.’’
Branch will also offer preferential loan terms to Visa merchants who accept Visa on mobile QR codes in Kenya, Tanzania and Nigeria. The loans will provide merchants with funds to grow their business through supplemental stock, infrastructure investment, and other key operational needs. Loans will be disbursed to Visa virtual credentials attached to merchants’ phones.
“With this partnership we seek to offer value beyond just transactions. We would like to help merchants grow their business and drive financial inclusion among the small merchant segments that are often unable to access quick loans.” Williams added.
Branch CEO Mathew Flannery said, “At Branch, we think our innovative mobile financial app will be able to provide consumers and merchants access to financial services thereby creating a larger and more robust open loop payments ecosystem for all participants. It only makes sense to be working together with Visa to bring world-class financial services to merchants here in Kenya and beyond.”
The partnership will among others; grow and differentiate acceptance in Kenya through expansion of merchant lending programs as well as expand Visa virtual card issuance and usage through Branch loan disbursements
“As we look to the future, we are looking for the opportunity to reach people who are outside of the formal economy or in places that are underserved,” says Bill Sheedy, Visa’s executive vice president of strategy, of the new investment with Branch. “It’s about tapping into their distribution to help shape the future of microfinance.”
Alex Rampell, a general partner at investor Andreessen Horowitz, says the potential of Branch’s business model has only become more clear as Branch grows: “The idea has become even better as time has gone on, and the market uptake shows it.”