Fintech
Accel leads a $4 million investment in Egyptian corporate card platform Swypex
Image credits: Swypex
Cards are gaining ground in Egypt, with over 30 million in circulation (prepaid cards, in particular, are more used than debit and credit cards combined). This increase in card usage, around 14% over the past four years, is mainly due to incentives introduced by fintech companies and banks, which attract millions of Egyptian consumers who previously relied mainly on cash for their transactions.
The adoption of corporate cards tells a different story. Companies of all sizes have been hesitant to adopt corporate cards due to limited access and inadequate spending controls over their use.
Traditionally, banks have been the primary providers of corporate cards across the country; however, fintech companies are now entering the scene to drive adoption. Swypexone such fintech that offers corporate cards and management tools for businesses has raised $4 million, which it will use to expand its platform’s business and technical capabilities.
Image credits: Swypex
They are facing around 3.8 million businesses in Egypt challenges with complicated and rigid financial systems, according to a UNDP report. Like many others across Africa, these companies use multiple disjointed methods to manage their finances, causing inefficiencies. Employee fraud is also a problem, with companies losing an average of 5% of their revenues each year due to fraudulent activity that often arises from cash transactions such as asset misappropriation and financial misrepresentation.
Preparations for launch
However, there are significant benefits from a regulatory perspective; for example, Egypt’s largest bank, the Central Bank of Egypt (CBE), has launched initiatives such as the Instant Payment Network (IPN) to reduce cash-based transactions and encourage digital payments.
Several fintechs in Egypt, including Swypex, are leveraging such initiatives to launch necessary financial services while adhering to central bank guidelines. CEO Ahmad Mokhtar explained that the startup, founded in early 2022 but only now emerging from stealth mode, has spent its first year acquiring essential licenses, ensuring regulatory compliance and working with payment processors and bank sponsors. Swypex rolled out the beta to 100 customers last December.
“We spoke to hundreds of different companies, from startups to SMEs, large corporations, enterprises and publicly traded companies, to understand what their challenges were at different stages,” said Mokhtar, who launched the startup with Tarek Mokhtar (CPO) e Sasan Hezarkhani (CTO), on the issue faced by Swypex. “We realized that there were specific shared pain points that hadn’t been addressed in the last decade or two, such as businesses that are predominantly using cash and losing visibility over their money or using somewhat archaic banking services, so they had to visit banks a lot to sign physical papers and documents to get things moving for their businesses.
All in one financial management platform
Mokhtar said Swypex provides companies with an “unlimited” number of corporate cards for their employees. The platform allows these businesses to set smart controls to manage spending, such as setting different limits and specifying usage permissions for ATM withdrawals and online transactions. After transactions, employees can upload receipts, invoices and expense details, which are consolidated into a centralized dashboard with integrated data from the government’s e-invoicing platform. In addition to ERP and accounting software integrations, Swypex offers businesses a simplified and comprehensive overview of all expenses and expenses in one place.
“Businesses using our platform can see spend distribution analytics at the level of each department, merchant, individual and category,” said CPO Tarek Mokhtar. “We also categorize all expenses on the platform to provide deep insight into a company’s financial health and each line item, which will help companies make more data-driven decisions based on the real-time visibility we provide them.”
Swypex’s competition in the corporate card space across Africa includes YC-backed companies such as Boya and Bujeti. In Egypt these are banks such as HSBC and National Bank. Mokhtar argues that Swypex is a better option for businesses because it allows for greater customization of its offerings and provides a broader range of features and services, including unlimited card issuing and advanced checks. “Our focus on things like user experience and instant controls on these cards, like blocking them, and integrating all that automation, is fundamentally new to the market,” the CEO said.
The two-year-old all-in-one financial management platform, which offers businesses their first three cards for free, generates revenue from interchange fees, floats and FX markups.
Increase in corporate cards in the coming years?
Accel, the storied venture capital firm that made its first fintech investment in the MENA region (though it backed an African money transfer app), led the $4 million seed round in Swypex. Investors who participated in the round included Foundation Ventures, The Raba Partnership and other angel investors.
That’s significant for a startup that exits beta phase after only a few months, especially in a challenging funding climate where traction and revenue are priorities. But there are good reasons why it has attracted investment even before its official launch: Swypex’s potential to address a sizable market (it targets a portion of the value cards and payments market over 10 billion dollars and is expected to grow at a CAGR of 10% over the next three years), as highlighted by Mokhtar, along with the founders’ background in large-scale product development for global companies such as Twitter, PlayStation and Spotify.
“As the payments industry continues to digitize, the opportunity to provide modern fintech products to Egyptian businesses has become even more important,” Richard Kotite, vice president of Accel, said in a statement. “Ahmad, Tarek and Sasan identified a gap in the market for a comprehensive B2B solution that addresses many of the key pain points that businesses regularly face, while driving step change in efficiency. We see a real opportunity for Swypex to become a fintech champion across the Middle East. The team is technically experienced and very ambitious and we are delighted to join them on this journey.”