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September 21, 2021

‘We are not a bank – and you can take that to the bank’, says digital banking CEO

By Eric Johansson

Digital banking startup dopay has raised an $18m Series A round to provide financial services to unbanked people in Africa. The London-headquartered fintech maintains that it is not a challenger bank despite offering services akin to those provided by the likes of Revolut and Monzo. It is instead presenting itself as a “virtual banking platform”.

“We are not a bank,” Frans van Eersel, founder and CEO of dopay, tells Retail Banker International.We are a technology platform that sits on top of existing banking infrastructures. Given that a large part of the population is unbanked, we are not in fact challenging the banks – i.e. we are not taking customers away from them. Instead, we are bringing more people into the financial system. Or to put it another way; we are not eating anybody else’s lunch, we are bringing more food to the picnic.”

Founded in 2014, the startup has a business model geared towards helping employers digitalise salary infrastructures. While the startup helps “hundreds of active corporate clients” create their own accounts, it doesn’t provide its own accounts in the way neobanks like N26 or Starling Bank do.

dopay’s goal is to, as it puts it, break “the cash cycle” for an estimated 200 million businesses still relying on cash payments. Going cashless, van Eersel argues, would give many benefits for the businesses dopay targets.

“In frontier economies particularly, many businesses still pay employees in cash,” the dopay CEO says. “For employers this is costly, creates security issues and generates a lot of practical challenges (imagine the logistics involved in paying 1,000+ employees in cash!). For employees, being paid in cash means they are excluded from the most basic financial services. As dopay, we are committed to breaking that cash cycle.”

dopay is able to provide those services in Egypt thanks to it being given an agent banking license on the back of inking a partnership with Arab Banking Corporation Egypt in August.

“Companies using our platform can open wages accounts for their employees and other beneficiaries in seconds,” van Eersel says. “The accounts come with a debit card that their employer loads wages onto. The employee can access their money as cash, if they want to, via ATMs. However, they can also make payments electronically and they don’t have to handle or store cash all the time. The cash cycle is broken.”

Even though the dopay CEO maintains that the venture is not on a collision course with banks, he does admit that the company’s benefits would make up for the limitations of traditional lenders.

“Businesses can make payments from their dopay payroll overnight, without any limitations of bank opening hours or cut-offs,” van Eersel. “In fact, with one press of a button, any wages payment can be made 24/7/365. It means convenience and flexibility when it comes to paying employees, with all the hassle removed.”

Other benefits highlighted by van Eersel include cutting costs as “employees no longer have to queue to collect their wages in cash during working hours,” workers gaining “access to mainstream financial services, which increases their financial well-being”, and the employers being able to “build a trustworthy brand, as regular and reliable wage payers, that helps with employee retention and recruitment.”

dopay will use the capital from its new cash injection to expand its services in Egypt and, at some point, across the Middle East and North Africa. van Eersel provided no clarification as to when and to where that planned expansion would happen.

The round was led by Force Over Mass Capital, FMO and NN Group. Mbuyu Capital and Alder Tree Investments were also significant participants.

Wouter Volckaert, chief investment officer at Force Over Mass Capital, said:

Egypt has around 2.4 million individual businesses and 104 million people, some 67% of whom do not have a bank account, while 94% have no access to credit. The dopay business model engages with business owners in the first instance, meaning they don’t have to attract individual customers. Each company signing up with dopay brings an entire workforce in a single transaction, and this is a very strong growth driver. Their new platform provides frictionless onboarding for employees, while enabling dopay to scale their business at pace.”

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