From selling ringtones to processing billions of dollars

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Hey there! Welcome to this edition of Tech Safari.

One of the coolest things we do at Tech Safari is working with Africa’s most impressive companies to tell their stories.

And today, we’re partnering with Africa’s Silent Payment Giant and the fintech of fintechs.

Let’s dive right in!

Cellulant

You might not have encountered them directly.

But if you’ve shopped on Jumia, booked a flight across Africa, or sent money through Nala, you’ve probably paid through them.

And back in 2008 when Cellulant started payments, things were different. Very different.

Most business happened offline. Traditional banks were giving the side-eye to this digital transactions thing.

And customers? They largely knew only one way to pay: cash.

But as mobile phones became a hit across Africa, Cellulant saw a future where banks, mobile money platforms, and businesses could come together and make online payments a reality.

That future is happening right now.

In 2020, Africa saw about 47 billion individual transactions from digital payments, amassing over $800 billion in total transaction values.

While Cellulant hardly shouts about it, they’re in the middle of this payment party.

Last year, they processed more than $13 billion in transfers and payments across 35 African countries, with some of the most extensive payment infrastructure in the continent.

But here’s the catch: Cellulant never set out to be a payment company.

In this edition, we’re reliving Cellulant’s evolution across twenty years, and looking at the future of African payments from their eyes.

Let's get to know Cellulant: Africa’s Silent Payment Giant.

Cellulant’s Evolution

I had a chance to sit down with David Waithaka — the Chief Revenue Officer at Cellulant.

I first met David through Ken Njoroge, Cellulant’s co-founder and former CEO. Ken calls him ‘one of the best minds in payments.’

And honestly, that’s exactly how I felt after soaking up his wisdom on payments and reliving almost 20 years of Cellulant's evolution.

David ran me through the eras of Cellulant as it happened.

Their first era in 2003 started in a dusty warehouse, where they earned the moniker..

‘Lord of the Ring(tones)’

In 2003, David’s first meeting with Ken, Cellulant’s co-founder, went down in a dusty warehouse.

They only had a handful of team members onboard. And they were not a payment company.

Cellulant’s grand plan at the time? To sell catchy ring-back tunes and serenade callers before you picked up.

See, Cellulant was born right during Africa’s cellphone boom.

As phone penetration skyrocketed, Cellulant sold hundreds of thousands of these ringtones a month with airtime (or prepaid phone credit).

They earned the moniker, ‘Lord of the Ring(tones).’

As a ringtone seller, they made sure cellphone users enjoyed their favorite tracks while artists earned income digitally for the first time.

But there was one problem.

Cellulant had to split their revenue with telcos: who took between 30-70% of their revenue.

So they walked over to the banks to see if they could charge customers directly, and reduce their revenue split to 10-20%.

And when they approached banks, the banks were blown away.

The Banking Era

In the early 2000s, banks had this issue.

Their customers had to go to an ATM each time they wanted to check their balance.

And if they wanted to access any other banking service, they had to walk into a bank branch to talk to a bank teller.

This was expensive.

David explains it costs the banks 50¢ every time a customer checked their balance at an ATM, and $2 every time they went into a bank branch.

But it costs Cellulant just 5¢ to deliver a ringtone to the end customer on their cellphone.

And if Cellulant could deliver ringtones with their infrastructure, they could deliver bank statements, and airtime purchases - at least 10 times cheaper than banks.

And what’s more - in 2007, when mobile money really started to take off, Cellulant was the first to build connections between banks and MPesa.

Cellulant got to building. And in three short years, they had 65 banks onboard launching mobile banking with them.

But there was one problem..

Mobile banking worked. But at the time, it didn't scale.

See - banks need water-tight protocols and structures to keep their customers safe.

To get mobile banking, you had to go into your local branch, fill out a form, and then wait for a few weeks to get a PIN sent to your phone.

By then, most customers had forgotten they’d applied. And their PIN expired the next time they wanted to check their balance.

Luckily, Cellulant came out of The Banking Era with one thing: connections.

Cellulant built hundreds of connections between banks and their payment methods and plugged it into their infrastructure

So when mobile banking didn't scale, Cellulant decided to see if they could help merchants accept payments directly into their bank accounts: also known as online payments.

That’s when they dived right into their next phase..

Productising Payments

Cellulant found the potential in all these connections when they started talking to airlines.

Airlines needed to collect payments in countries around Africa.

One of Cellulant’s airline customers is Ethiopian Airlines, which flies to 38 countries.

Each country has 5-6 payment methods.

For Ethiopian Airlines to accept the most common payment methods in 38 countries means having about 200 payment integrations.

That’s 200 contracts to set up. And 200 integrations to keep up with as they change.

Airlines needed their own tech companies just to accept payments.

Fortunately, Cellulant had all of these connections and could offer them in one gateway.

And as Cellulant went deeper into merchant payments, they found this was a major headache across the continent.

It signaled the start of Cellulant’s next phase: Productising Payments.

It’s when they decided to really tackle this payment problem for merchants.

And this era is one of Cellulant’s most exci—wait for it—Tingg.

Tingg by Cellulant was their answer to businesses: a payment gateway for merchants in (and getting into) Africa.

While Tingg started with online payments, Cellulant stacked more products on top of Tingg to make life easier for businesses.

Imagine you're a merchant. Collecting money from customers is just the tip of the iceberg.

Next, you need to pay that money out - usually into different accounts in different countries.

So Cellulant added Payouts to Tingg - letting businesses choose where they want their money to go and how it gets there.

And even though digital payments are on the rise, they only make up 5-7% of transactions in Africa. Most transactions still happen offline.

That's why Cellulant added Instore to Tingg - to let businesses collect offline payments with their customers’ preferred method of payment.

Through Tingg, Cellulant has grown payments into a product suite that helps merchants get paid and move money.

And this shifted their customer base.

Enterprises eyeing an African expansion came knocking. And today, Tingg powers payments for over 2000 businesses, processing 20 million transactions a month.

And that just about brings us to the present day and makes us wonder about..

The Future of Payments (and Cellulant)

In some way, Cellulant in 2023 feels a lot like 2008 all over again.

A digital shift is happening in Africa. Cellulant sees an opening, and they’re running at it.

This time though, it's not about digitising transactions for banks.

Cellulant’s next agenda? To create one Africa for the movement of money.

See, while customers across Africa enjoy more payment options, businesses can't handle all the ways to get paid.

And if you’re a global merchant launching in Africa or a regional merchant trying to move across different markets, it’s even harder.

Different currencies. Different rules and regulations. Different politics. Different everything.

Most African countries have mobile money, digital wallets, remittance systems, electronic transfers, and even cards in the mix.

Imagine juggling 277 mobile wallets, more than 500 banks, and a whole bunch of card networks spanning 55 countries.

It’s way too much. And if you skip a payment method, you skip potential revenue.

It’s a villain we know all too well. Fintech Fragmentation.

And while it feels like everyone is doing payments, Akshay Grover, CEO of Cellulant, thinks that we’re still only at the beginning.

We asked him why Cellulant is so bullish on payments:

‘Payments are the bedrock of everything else in fintech. How do you lend without payments working?

The underlying transaction has to be payments, and that infrastructure has to be robust.’

Cellulant’s mission is to accelerate economic growth for all of Africa.

David Waithaka (Chief Revenue Officer at Cellulant) explains:

‘The continent is ready to move in a digital way. We have artificial boundaries and want to see Africa stop being fragmented. We want to see a connected Africa for payments.’

And when money can move, that has a real impact across the continent.

‘The more you can enable payments, the more you create money velocity. And the more money moves, the more you can unlock GDP growth.’

Cellulant has evolved many times into Africa’s silent payment giant: steadily building payments infrastructure for airlines, retail giants, big banks, and tech leaders.

And in this era, they’re using their 20 years of experience and hundreds of payment connections to double down on Africa’s payment opportunities

What do you think about Africa’s Silent Payment Giant and their vision of building one Africa for payments? Let me know here.

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