NIGERIA – Africa-focused payment startup PalmPay has raised US$40 million in a seed round led by Chinese mobile-phone maker Transsion to expand its operations in the West African region.

Africa is believed to be home of about 1.2 billion people, and it represents the largest share of the world’s unbanked and underbanked population.

An improving smartphone and mobile-connectivity profile for Africa is however turning this scenario into an opportunity for mobile-based financial products.

Hundreds of startups have been descending on Africa’s fintech space due to its promise of high returns and are looking to offer scalable solutions for the continent’s financial needs.

Statistics offered by WeeTracker, show that fintech now receives the bulk of VC capital and deal-flow to African startups.

PalmPay is one of these startups seeking a share of the expanding digital finance market and according to a Transsion spokesman, the investment came via Transsion’s Tecno subsidiary, with participation from China’s NetEase and wireless comms hardware firm Mediatek.

Before going live, the startup which aims to become Africa’s largest financial services platform, had piloted its mobile fintech offering in Nigeria since July 2019, before going live at a launch in Lagos.

As part of the investment, PalmPay has entered into strategic partnership with mobile brands Tecno, Infinix and Itel that includes pre-installation of the startup’s app on 20 million phones by 2020.

PalmPay, a U.K.-headquartered venture, offers a package of mobile-based financial services, including no-fee payment options, bill pay, rewards programs and discounted airtime.

In Nigeria, PalmPay will offer 10% cash back on airtime purchases and bank transfer rates as low as 10 Naira ($.02).

In addition to Nigeria, PalmPay will use the $40 million seed funding to grow its financial services business in Ghana and has plans to expand to additional countries by 2020, PalmPay CEO Greg Reeve revealed during a telephone interview with TechCrunch.

PalmPay received its approval from the Nigerian Central Bank as a licensed mobile money operator in July 2019.

During its pilot phase, the payments venture revealed that registered 100,000 users and processed 1 million transactions, according to a company spokesperson.

With its payments focus, the startup enters Africa’s most promising digital sector, but also one that has become notably competitive and crowded — particularly in the continent’s largest economy and most populous nation of Nigeria.

PalmPay however bets on its strategic partnership with Visa and its CEO who comes to the position after serving as Vodaphone’s global head of M-Pesa – one of the world’s most recognized mobile-money products in the world- to help it conquer the African market.