Hi friends 👋🏻,

Welcome to another episode On Today’s Episode (sorry we’re not talking about movies, no pun intended:)

Flutterwave has been in the news lately from raising $170 million thus becoming the First Billion Dollar company Built by Africans in less than 5 years (sorry Fawry, Interswitch, Jumia- you’re either too old or not “fully” African) to securing partnerships with PayPal, it made me more curious to dive deep into why the company is so appealing to people.

Writing and analysing the company has led me to believe that Flutterwave is underestimated and is only just getting started in payments and e-commerce dominance. I came away very excited and couldn’t wait to share this with you all.

Now, let’s get to it!

What Is Flutterwave?

‘Afropreneur’ – a word coined by Idris Ayodeji Bello, an early investor in Andela and Flutterwave (both coincidentally co-founded by Iyin Aboyeji) describes the bright, independent, and tech-savvy entrepreneurs using creative thinking and the power of innovation to take over Africa’s economic destiny. This very much describes the co-founders at Flutterwave, Afropreneurs who took it into their hands to build the payment infrastructure for African businesses to send and receive payments. The story of Flutterwave is well documented.

Before it became the giant, Flutterwave was just an easy-to-use service that allowed SMEs to accept payments through something called APIs. APIs abstract all the complexity of creating a payment gateway, risk management and processing facilities using small lines of code to make payments easy for African businesses.

Since its founding in 2016, Flutterwave has gone on to raise a total of $225 million and in doing so has become an African Unicorn in every sense of the term; a company founded by Africans in Africa reaching a $1 billion valuation in fewer than 10 years. Yes, to be exact in only 5 years.

Looking at the image above, you could be mistaken to think that this is just another company raising funds. You wouldn’t know that through this raise, the company became a unicorn except by reading articles outside its official press release. It is this humble attitude, that has made the company so successful. But before the founders founded Flutterwave, they were quite successful in their previous ventures.

Iyinoluwa “E” Aboyeji co-founded Andela, a company that connects African software developers to global companies like Facebook, IBM and Microsoft. In running the company, it was difficult to pay the hired developers and so had to incorporate the business in each African company it had developers to pay them. Imagine your friend gets you a job for a company and because the company doesn’t trust you (at least yet), it decides to pay you through your friend. But your friend can’t pay you directly because he lives in another country and so the only time, he pays you is only when he visits which is about every 2-3 months. (I know this may sound like an oversimplification of how it worked but you get the gist).

Extrapolate this to the many people across Africa facing this same issue. Without cash, you can’t plan, invest or spend until a few months after the work is done.

So, while working on Andela, he realised how difficult this was because of the costs involved and the pains faced by African developers. He began Flutterwave with his friend Olugbenga “GB” Agboola. Now, GB before now was a star in his own rights. He has an MBA from the Massachusetts Institute of Technology (MIT) Sloan School of Management and a master’s degree in information technology security and behavioural engineering. and had previously worked for international companies like Google and PayPal as week as local ones like GTbank, Standard bank and sterling bank. He was very much a developer as he was a banker.

After leading Andela to raise $24 million from the Mark Zuckerberg and Priscilla Chan foundation, he left months later to focus on Flutterwave with GB. They believed that as more people were starting businesses online and international businesses were willing to transact with Africa, payments would be the pipeline to connect both worlds. And since they started all their efforts have been geared to one thing:

To make it easier for Africans to build global businesses that can make and accept any payment, anywhere from across Africa and around the world.

An instrumental component of any payment’s infrastructure is the various places at which users can pay into. With Flutterwave, the opportunities are vast. Businesses decide where and when they want to accept payments whether Online (Website & Mobile), POS (Point of Sale) or even sell in-person at their stores and events. Yes, even events. They have a page dedicated to all the events created using the Flutterwave platform which you can check here.

Since Flutterwave began as a company that allows startups to accept payments online with a few lines of code it has gone on to expand its solutions to become the Unicorn that it is today:

  • Checkout: Seamless and quick experience for customers.
  • Card Issuing and Management: Create and manage custom virtual cards. Now, individuals and businesses can create virtual cards dominated in their local currency and dollar thus allowing payments to region-restricted services like Spotify.
  • Store: Selling online with the Flutterwave store. As the pandemic struck in 2020, businesses were forced to close their stores. The introduction of the store brought many SMEs to the digital era connecting them to more customers than ever before.
  • Invoices: Send invoices to customers via email or WhatsApp. With this, a freelancer can create a digital invoice that contains all the necessary information his employer needs and then pay for his services.
  • Payment Links: Receive payments with ease without a website or integration. This was how Flutterwave began and remains one of the coolest things about the service. You can send a customer a payment link from which he can pay using different options like card, bank transfer, USSD etc

Because of Flutterwave, small businesses in Africa no longer have to worry about payments. Typically, Flutterwave charges 1.4% of the total value for local transactions (within your country) and 3.8% for international transactions. It still has to pay banks and other intermediaries, so I assume Flutterwave’s take rate is typically somewhere between 0.5-1.5% of the transaction value. Clearly seeing as it’s a numbers game, they succeed when more people buy more things online.

In just five years, Flutterwave has gone on from being a platform where you can send payment links to creating a suite of products where businesses can join the digital era, start and run an online business.

How Online Payments run and Why that’s a Problem

source: Payments infrastructure in Africa

How payments work is that when you visit a vendor to buy an item and click “Pay”, your request is sent to the Acquirer bank (read: vendor’s bank) who requests authorisation from the processor (Mastercard, Visa etc). The processor then sends an authorisation request to your bank who authorises the transaction and then your bank deposits the money in your vendor’s bank account. The problem with this was that vendors/merchants needed to independently integrate to each of these payment providers. That’s why there was a lot of failed POS transactions because one could accept Mastercard and not the other. This allowed for people to default to cash, in-bank deposits or mobile money wallets.

Flutterwave comes in by being the middle layer between payment service providers and global merchants accepting different payment options; bank payments, cash, mobile money, local & international card payments.

You may be surprised to know that Flutterwave wasn’t the first shiny startup on the payments block. Paystack, a fellow YC alum, started in 2015 to also help African merchants collect web payments. The big gatekeeper of them, whom all previous startups attempting to disrupt fell, was Interswitch. The company started in 2002 as a ‘switching’ infrastructure to connect the different banks in Nigeria and provide technology for ATM cards. But while they ran their operations, complacency crept in and there are some factors that it did that would lend it to being vulnerable to disruption:

  • Lack of technology innovation
  • High costs
  • Poor customer experience
  1. Lack of technology innovationPOS failures, poor UI (user interface), back-office reconciliation and settlement processes were common phrases you heard from developers and people trying to use Interswitch.

    I have no understanding of what reconciliation and settlement mean (finance wasn’t a part of a chemical engineering program) and so according to Investopedia: “Reconciliation is an accounting process that seeks to check two sets of records, often internal and external, to ensure that the figures are correct and in agreement.” Settlement on the other hand means the “process whereby securities are delivered, usually in simultaneous exchange for payment of money, to fulfil contractual obligations between both parties.”

    To give some perspective, imagine you’re a business owner that accepts payments, you have to wait 1 or more days before the money hits your account. The high failure rates of Interswitch’s services meant a huge backlog of debits that would take a long time to be rectified.

  2. Poor customer experienceMost of the users of Interswitch’s Webpay platform complained that it didn’t just work. There’s an entire article (more like a rant) by Bankole of techcabal on why Interswitch had a bad customer experience reputation and didn’t just work for developers. The service was slow and known to be unreliable, even going hours without service. In integrating online payment for a site, developers read the API documentation to understand how everything works but the more they read, the more confused they became. It’s why there were high failure rates through POS terminals for instance.  Perhaps due to a lack of competition, they were also slow to revamp their systems despite its many glitches which often left merchants and customers frustrated. Small businesses also needed to go through the convoluted registration process via the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) before they could integrate with Interswitch. So, it all just meant that the service wasn’t meant for them.
  3. High costsTo use Interswitch, it costs an arm and leg to integrate the payment gateway. Before the likes of Flutterwave and Paystack came around in 2016, developers paid NGN 150,000 in setup fees for Interswitch and no, this doesn’t include 1.5% transaction fees it still charges on every transaction.

Don’t get me wrong, Interswitch were and is still a big player but their strategy only meant that big companies with large cash assets were only able to use their services and thus led small businesses to find alternative means like eTranzact, Chams or use e-commerce sites even when it wasn’t specific to their case. The problem with using other PSSPs (payment solution service providers) like eTranzact can be best explained figuratively.

Imagine you use Google as your search engine and for some reason, Google tells you that its servers have gone down and you’d have to wait for 3 hours or use alternatives like Bing, DuckDuckGo. But the thing you ask yourself is “sorry what’s Bing?” (we all know what Bing is 🙂

That’s the same way it felt for small businesses at the time.

With Interswitch being slow to innovate, having spotty service and very expensive to entice small businesses, Flutterwave came in at the perfect time to disrupt the industry.

Flutterwave and disruption.

By dictionary definition, disruption is “radical change to an existing industry or market due to technological innovation”. Yes, and that is exactly what Flutterwave brought. A radical change in the way businesses sends and receive money while using technology to change the existing industry. Clayton M. Christensen, the Guru of ‘Disruptive Innovation,’ in his article What Is Disruptive Innovation? (hbr.org) lays it out in pure business parlance (bold mine):

First, a quick recap of the idea: “Disruption” describes a process whereby a smaller company with fewer resources can successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others. Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more suitable functionalityfrequently at a lower price. Incumbents, chasing higher profitability in more-demanding segments, tend not to respond vigorously. Entrants then move upmarket, delivering the performance that incumbents’ mainstream customers require while preserving the advantages that drove their early successWhen mainstream customers start adopting the entrants’ offerings in volume, disruption has occurred.

I could almost suggest that Mr Christensen prophesied how the payments landscape would be disrupted. Flutterwave came in with few resources (staff and cash), built “more suitable functionality” (through better APIs that worked) and doing so at a lower price (1.4% transaction fees against the high setup costs and transaction fees of Interswitch).

Small copy changes, bigger picture mindset.

Looking at the Flutterwave website as it has changed over the years, shows small copy changes that point to larger strategic priorities. They shifted from focusing solely on engineers to creating a sales function for larger or less technical customers. Its catchphrase has changed from “The complete payment solution to thrive in the global economy” to “Grow your business with Flutterwave.” These copy changes will be explored in more details later in the essay.

Some of the companies that partner with Flutterwave include Uber, Booking.com, Jumia etc and they work with Flutterwave not because they can’t develop an internal team to hand payments but by doing so, Flutterwave focuses its efforts on providing the integrations that add up to a better experience for developers, higher acceptance rates, and less fraud.

The Bear Case.

Despite all the successes that Flutterwave has achieved over the years, it is still solving a hard problem in payments where governments and businesses are reliant on cash. The bear case focuses on what it faces in the future as payments become an easier space to access as it continues to expand into new markets with different dynamics. These were the top 3 categories I came up with after having discussions with some people

  1. RegulationsStarting a business in Africa is hard, building a global business solving payment infrastructure for African businesses is much harder. Despite this initial hurdle, Flutterwave has risen to become the first African company built by Africans to reach Unicorn status. Central banks and regulatory agencies in many African countries are known to be anti-innovative and can sometimes enact rules that impede growth in the region. In the words of Agboola, “Africa is not a country, but we make it feel like one”. the company would need this sort of resilience to transverse through Africa’s murky regulatory environment.
  2. Payments have become more commoditisedThe payments sector has changed since 2016 when Flutterwave began and it is now seeing more players. The likes of Branch, Tala, Paystack and even Interswitch have improved their offerings and are proving to be more competitive. Flutterwave can lay claim to its transaction volumes, country presence (present in over 30 countries) and brand to uniquely add to its existing global partners to successfully compete with them. Another elephant in the room could be WhatsApp pay but industry experts believe that synergy could exist with them being partners rather than as direct competitors and further increase the adoption rates of payment companies.
  3. Customer concentration risksMuch of Interswitch is Nigeria and according to its 2019 revenues, it makes N30 billion annually. That’s about $2.5 billion per month which is more than 5x Flutterwave earns in revenues. Some questions will arise about where Flutterwave makes most of its money geographically and its adoption in these places. About 94% of retail transactions in Africa in 2016 are conducted in cash, which means that only 6% of transactions are made with bank cards or e-payment systems. Despite this Flutterwave is showing impressive growth, growing at more than 395% since 2017 and the speed to release new products keeps it above its peers.

Even after coming up with these possible cases, I just can’t help but feel these are minor to the upside that Flutterwave is giving African businesses. I am very sure the Flutterwave team would think about these and many more, so I’m bullish to say they are more than capable of handling themselves. The speed at which they move into new markets and release new products while keep marketing spend very low shows the depth of quality of the team and how much it has changed the game.

Twitter avatar for @asemotaOsaretin Victor Asemota @asemota

While we are all guilty of blowing our trumpet too much in Africa and falling into the trap of forming protective tribes and echo chambers around those we are close to, I still believe @theflutterwave is grossly underestimated. That is why comparing them to others annoys me.

Osaretin Victor Asemota @asemota

YCombinator companies valued at $150m+ #97 is @theflutterwave. Also only African company there. https://t.co/PxWzsW7INY

Flutterwave’s Strategy

In October 2020 when competitor Paystack got acquired by Stripe for more than $200 million last year, people were talking and suggesting that Flutterwave would take the same route. Less than 6 months later, Flutterwave raised its Series C round valuing the company at over $1 Billion and no one is talking about the company looking to exit any time soon. As a private company, they don’t share many details about their figures but what caught my attention in their press release was where they mentioned an exceptional revenue growth of 226% CAGR from 2018-2020. It may have raised at less than its true valuation. Hear me out as I walk you through some back of the envelope calculations:

  1. The pandemic started in 2020 and since then e-commerce boomed greatly. Jumia reported a 50% jump in transactions during the first six months of 2020 and its share price went as high as $21 increasing by 212% by August.
  2. Flutterwave is likely processing more payment volume than competitors. Paystack in July, 2017 did $3 million/month, $27.5 million/month in Nov 2018. Flutterwave in 2017 did $17million/month, $83 million/month in 2018 and a whopping $416 million/month in 2019. That’s an increase of 501% in one year. In the bear case that it increases by 300%, that would mean it processed at least a modest $1.6 Billion/month in transaction volumes in 2020. With Covid inflating the e-commerce space, this assumption may not be very far off.
  3. New businesses are launching on Flutterwave. Two months after the launch of the Flutterwave store in May, they had reached 5000 stores and by November, GB tweeted that they had reached 17000 stores.

Well, the numbers are very optimistic and can be very much influenced by the pandemic, but you can’t deny the fact that the amazing teams at Flutterwave continue to deliver by building solutions that connect businesses globally.

Another thing the company mentioned in the press release described its key advantages and how it had become the giant it is today. According to Flutterwave:

“The Company’s key advantage is international payment processing in 150 currencies and multiple payment modes including local and international cards, mobile wallets, bank transfers, Barter by Flutterwave etc. Flutterwave has an infrastructure reach in over 33 African countries.”

Since its inception, Flutterwave has processed over 140 million transactions worth over $9 billion worldwide and continued to expand its footprint in different geographies previously unserved to send and receive payments. By being early in the payment space, Flutterwave has built key partnerships with Visa, Worldpay, Alipay amongst others along the way and all these further compounds its benefits to merchants and users as it adds more and more products to its already growing suite of services.

This strategy suggests that Flutterwave continues to build upon the key advantages it has to be a competitive player in the market. The advantages that keep its merchant from moving once they’re integrated into their platform. Specifically, they benefit from network effects, economies of scale, and high switching costs and so make them different from other players like Paystack and Interswitch.

  1. Network effects

    The value realized by a customer increases as the installed base increases.

    This means that as more and more users join a platform, it becomes incrementally useful to any additional person joining. Facebook is an example of this. It would be lonely if only you could send a friend request to just your classmates. What about your friends, family and other people you would love to use this service with? It’s the same with Flutterwave but in this case, as more and more merchants use the service to process payments, they can use the data to further strengthen their fraud detection systems such that when a person wants to send money to Boko haram (in the name of helping Nigerian youths), the transaction can be flagged just before it’s processed and other merchants benefit from this information. Now extrapolate these kinds of transactions and you see the kind of advantage Flutterwave has.

  2. Economies of scale

    The quality of declining unit costs with increased business size.” (I remembered this one from secondary school economics).

    Payments are known to be a business of volumes and that’s why they can charge 1.4% on transactions and so by distributing the actual fees to all its merchants, makes the transaction easy for merchants. By having this kind of advantage, they make it harder for new entrants into the industry and even over partners that may consider building the infrastructure in-house.

  3. Switching costs

    The value loss expected by a customer would be incurred from switching to an alternate supplier for additional purchases.

    The reason Interswitch couldn’t grow and win is that they had a service that was expensive, spotty and lacked a human feel. It was very non-product or customer-oriented. Once a customer starts using Flutterwave, it doesn’t mean that it’s “hard” to move to another service like Paystack but it’s a matter of pressing priorities. For instance, if you have a store on Flutterwave that accepts recurring payments. Now switching to a new payment processor means that you’ll make all your customers fill in their card information all over again. Trust me, many of them won’t.

Flutterwave relies on these strategies to grow with the underserved customers that were neglected by other payment providers and at the same time maintaining moats that give it a hedge over new entrants and other competitors in the market. As one example, Flutterwave’s Brand gives it an edge over other companies, who wouldn’t like to work for a fast-growing African Unicorn solving global problems?

While competitors can match Flutterwave on certain features, Flutterwave can win in the long term, because its actions are linked to maintaining merchant relationships with a design-driven focus as well as speed in product development. All these compounds over time giving it advantages over its rivals.

How It Started…….How It’s Going

In less than five years since the company’s founding, Flutterwave has raised a total of $225 million making it the fastest African startup to reach unicorn status. It’s valued at more than a billion dollars (maybe two billion, I’m being optimistic :)). It is the first African startup built by Africans to do this. Revenues continue to grow at a ridiculous 226% CAGR from 2018-2020, customer growth has now reached 290,000 merchants across 500,000 registered Barter users, went from 5000 to 17000 stores in less than five months and has now expanded its infrastructure into over 33 countries.

But what next for Flutterwave?

Investors looked at the recent Paystack acquisition by stripe and thought Flutterwave would be next but after the raise in March, it shows the company isn’t planning on exiting soon. Well in the short term, the company plans to use its new funds to accelerate customer acquisition in existing and international markets. This is one of the reasons we see partnerships with Paypal, WorldPay, Alipay amongst others. Connecting Africa to China, connecting Africa to South Africa, connecting Africa to global merchants, Flutterwave is uniquely positioning itself as the global African payments partner of choice for multinationals looking to expand into Africa thus reasserting the existing moats it has over other companies.

In the long term, I believe Flutterwave is looking for more ways to integrate itself into a customer and merchant’s journey across e-commerce. It has already established itself in the B2B space getting about 290,000 merchants. The play now would be to expand to B2C and it has started doing that.

  1. Flutterwave Mobile is an app that allows businesses to use their phones as a mobile store, POS channel and dashboard to efficiently manage their business.
  2. Flutterwave stores allow businesses to start and own an online store without having to build a website or having knowledge of code.

Flutterwave Store launched during the pandemic as part of its campaign to help businesses #KeepTheLightsOn. It now has over 17000 stores. I believe that the plan to enter the e-commerce space has always been in the works and the pandemic just accelerated it. With this Flutterwave can now be the go-to player to start and run a business online. This puts it in indirect competition with the likes of Jumia (ironically a Flutterwave company), Konga and even Instagram.

The company is moving beyond facilitating payments and after raising its $35 million Series B round, it only confirmed my thoughts (emphasis mine).

“We don’t just want to be a payment technology company, we have sector expertise around education, travel, gaming, e-commerce, fintech companies. They all use our expertise…our business goes beyond payments. People don’t want to just make payments, they want to do something” says Olugbenga Agboola, Flutterwave’s CEO.

The store now helps businesses with logistics to take care of last-mile delivery. how this could work would almost be like a fusion of Stripe and Shopify. Normally Stripe provides the payment infrastructure for online stores on Shopify to accept payments. this is where Flutterwave enters, it hosts the tools to create and launch online stores but also the infrastructure to accept and receive payments.

Where this begins to diverge is that Shopify has a host of other services including lending, marketing, shipping and customer engagement tools and Stripe is well established which Flutterwave doesn’t have at the moment and to be honest, doesn’t need. if it can lock down payments, store aggregation(through a marketplace) and logistics, it can become a big enough company to enter the field Shopify and Stripe are playing in.



With the data, scale and investor backing Flutterwave has, it can do much more. Here are some ideas I came up with:

  1. Monitor cash flow of merchants to create credit ratings for which it can offer lending services
  2. Make equity investments in businesses based on its data it gets similar to how Interswitch has an investment arm.
  3. Help governments and MDAs with financial planning on how to support SMEs
  4. Help entrepreneurs with research in providing the fastest-growing segments to explore.
  5. Create a “Jumia-like” marketplace where customers can search for products and be referred to individual stores. Think of it like this, if you wanted to get an item from a vendor on Instagram, you’d have to search using a hashtag or something else that gets you to the right vendor. You then maybe have to negotiate the price and then pay an exorbitant amount on delivery (à la Lagos island- 3000, Lagos mainland- 2000). With store aggregation, it puts you in direct contact with the best possible vendor, payment is easy and you have peace of mind on delivery.
  6. Move into accepting crypto. The Nigerian government already shut this down but it doesn’t stop them from processing crypto in other geographies.

Flutterwave possesses an intelligent mind in the person of GB to lead them as the company continues to grow and expand. Should it manage to cover some of the highlights listed above, we’ll be seeing an entirely different company than we one we once knew and Africa will be better for it.

If you enjoyed this piece, please try to share it with your friends, Boss, journalist, co-worker and anyone else that can benefit from this piece.


Also, if you’re an early-stage startup in Africa in the seed or pre-seed stage that wants to share your story to a wider audience and also bag some extra deals :), I’d love to hear about what you’re working on. You reach out to me on kamsonwani@yahoo.com

What did you love about today’s essay? Your feedback helps me make this great. Good, Meh, Great?

Thanks for reading and see you on the next episode,


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