Nala leverages $40 million Series A to build B2B payments platform and scale remittance services

The startup’s new B2B platform, Rafiki, also powers Nala’s consumer app. Fernandes told TechCrunch in a previous interview that they decided to build the payments platform to ensure the reliability of their remittance services and to serve global companies looking for reliable services.

By working directly with banks and mobile money providers, Rafiki says Nala can guarantee the availability of its customer service. In addition, its own payment infrastructure means lower fees for users of its consumer app, making the company more competitive.

Ensuring service delivery, Fernandes said, is what drives the growth of the startup’s consumer business, which currently accounts for over 90% of its revenue. He said Nala is on track to cross the 500,000 customer mark and has already broken even.

The payments platform is also gaining increasing numbers of customers, including UK-based fintech company TransferGo, which uses Rafiki for payouts to Africa.

“Rafiki’s live customers on Nala include global payroll providers like Cadana, global remittance companies like TransferGo, and global banks that make cross-border payments. The focus is on enabling cross-border payments for financial institutions and service providers,” said Fernandes.

Opportunities in the remittance sector

Nala’s plans for remittance services in other emerging markets such as Asia and Latin America come after the World Bank predicted strong growth for the sector this year.

According to the World Bank’s Migration and Development Brief, remittance flows to sub-Saharan Africa are expected to grow by 1.5%, after declining slightly to reach $54 billion in 2023. Growth is also expected in regions such as East Asia and the Pacific (excluding China), South Asia, Latin America and the Caribbean. This growth means that demand for remittance services will remain.

“In India, migrants remit over $125 billion annually and the market is growing as more people leave the country. This creates opportunities for servicing these customers but also for global trade between regions, which will only increase. There is more trade between Asian and African regions and to enable this, the money needs to flow reliably,” said Fernandes.

While demand for remittance assistance is growing, the World Bank points out that cross-border money transfers remain costly. For example, the global average cost of sending $200 was 6.4% of the amount sent. However, the cost of digital remittances was lower at 5% compared to non-digital remittances at 7%. This speaks in favor of the services of Nala and its competitors, which include Flutterwave. Nala says that reducing the cost of money transfers is at the heart of its offering.

Lauren Kolodny, founding partner of Acrew, said: “We believe Nala will lead the way in remittances for the next generation of Africans, who are expected to make up 35% of all young people globally by 2050,” adding that the team “has deep local knowledge, fintech expertise and unique community-building know-how to build the cross-border payment pathways for the next billion people.”