Scale Raises $700K Pre-Seed Funding to Expand Card Issuance Services Across Africa

Scale, a South African startup specializing in card issuing orchestration for fintechs, has raised $700,000 in pre-seed funding. The round was led by 54 Collective, a sector-agnostic venture capital firm, and First Circle Capital, a fintech-focused VC. Sunny Side Venture Partners and various angel investors also participated in the round.

About Scale

Founded just a year ago by Barbara Woollams and Miranda Perumal, a former director at Visa, Scale plans to use this funding to expand its operations into Kenya, Zambia, and Cote d’Ivoire.

The timing is significant, as many African fintechs are reconsidering their reliance on card services. The costs associated with processing payments through multi-layered partnerships are squeezing margins, and issues like chargeback fraud are rampant. In 2022, fintechs like Eversend and Busha temporarily scaled back their card operations due to rising fraud rates. This followed Union54, a Zambian fintech, discontinuing its virtual card-issuing API. Union54 faced a 600% surge in chargeback fraud cases, prompting the decision.

Despite these challenges, Scale sees opportunities in markets like Cote d’Ivoire, which ranked first in West Africa for card issuance. In 2022, Ivorian banks issued approximately 2.4 million cards to customers, signaling a growing demand for card services in the region.

CEO Miranda Perumal expressed optimism about the startup’s growth trajectory:

“With the backing of our esteemed investors and partners, we are well-positioned to expedite our ecosystem engagement, build trust with African businesses, and continue to focus on solving major pain points in card rails by delivering unrivalled, world-class service.”

While cash remains dominant in many African markets, Scale is betting on the continent’s expanding fintech landscape, which is projected to hit $230 billion by 2025. By 2029, card issuance platforms are expected to manage about 35% of all payment cards.

Scale will be competing with established players like Onafriq in the B2B card issuance sector, but the startup’s leadership team and investor backing provide a strong foundation for growth.

Hetal Patel, chief investment officer at 54 Collective, emphasized the value Scale brings to the market:

“The Scale team, led by a rockstar female founder [with] deep sector expertise and proven bias toward action, truly excites us. We look forward to seeing Scale become a critical enabler for fintechs across Africa.”

As Scale gears up for its expansion, it remains focused on addressing the card issuance challenges fintechs face, while tapping into the continent’s growing financial ecosystem.