Happy Pay has raised $5 million in a seed funding round led by global venture capital firm Partech, as it looks to expand its ad-subsidised buy now, pay later (BNPL) payments network across Africa.
The round also included participation from Futuregrowth Asset Management, 4Di Capital, E4E Africa, Equitable Ventures and Felix Strategic Investments, the company said.
Happy Pay, which has more than 600,000 registered users, is building a payments model that removes interest and fees for consumers by shifting costs to merchants and brands that benefit from increased sales and customer acquisition.
The company generates revenue from merchants rather than consumers, positioning itself as a commerce infrastructure platform that integrates advertising, payments and financing into a single system.
Its AI-driven engine matches shoppers with relevant products in real time using behavioural and transactional data, surfacing offers across its app and partner channels. The platform optimises for completed purchases, with merchants paying only when a transaction occurs.
The startup said its approach creates a closed-loop system that links product discovery directly to checkout, enabling merchants to drive conversions while giving consumers access to interest-free instalment payments.
BNPL services have gained traction in South Africa, where access to affordable credit remains constrained and interest rates are relatively high. Consumers increasingly rely on instalment-based payment options to manage cash flow without taking on revolving debt.
Happy Pay said the new funding will be used to expand merchant partnerships, scale distribution across digital and physical channels, and strengthen its AI, fraud and risk infrastructure as it grows its user base.
Partech said it views the model as one that aligns incentives across consumers and merchants while reducing reliance on traditional interest-based lending.
“We’ve looked at BNPL companies across multiple markets, and the strongest models are those that deliver value to both merchants and consumers,” a Partech representative said.