Union54, whose API allows African software businesses to create and manage debit cards without the use of a bank or third-party processor, raised $3 million in a seed round led by Tiger Global barely six months ago. Last year, the founders of Union54 launched the company after going through the tedious process of issuing debit cards for their previous venture and challenger bank, Zazu. Union54 has issued slightly more than half a million virtual debit cards to its consumers since its inception in October and participation in Y Combinator’s summer batch 2021 earlier this year. The company also claims to have processed millions of dollars in double digit volume. Union54 aspires to provide a homegrown alternative to global card issuers Mastercard and Visa, which dominate the continent yet charge retailers higher fees. Perseus Mlambo, the CEO and founder of Union54, says that signing agreements with central banks across Africa can help develop trust and lead to the company offering a domestic and continental debit card, shortening settlement times, and integrating more local payment methods and APMs. Recent global developments, such as Visa and Mastercard withdrawing from Russia, leaving China’s UnionPay to fill the hole, have demonstrated that payments may be influenced by politics, according to Mlambo. A card scheme, a central payment network, uses credit and debit cards to process payments – to manage payment transactions, including operations and clearing. The card scheme transfers the card transaction information from the acquiring bank to the issuing bank (merchant to customer), and then the payment is sent back to the acquirer to accept and confirm the payment. Union54 wants to operate like two of the largest global brands, Visa and Mastercard. Visa and Mastercard have so much in common irrespective of logo. Both are widely accepted worldwide, and the benefits that matter most to card users aren’t determined by whether it’s a Mastercard or Visa card. Visa and Mastercard are not credit card issuers or distributors. Instead, they are payment networks, which process payments for credit card purchases between banks and retailers. Union54 intends to play in that market, easing the processes for Africans, eliminating the possibility of politisation, and lowering merchant prices. Union54 claims to have contacted three central banks interested in learning more about how settlement agreements would operate with a new card network. Flutterwave, Payday, and Plumter (cross-border fintechs) are among Union54’s partners, as is Bitmama, a crypto exchange platform.
