Meet BlackPay, a “no-frills, no-bank” startup for marginalized communities

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South African fintech startup BlackPay describes itself as a ‘no-frills, no-banks’ multi-product platform created to champion the financial inclusion of economically active but marginalized communities.

Created in 2017, Black Pay operates a multi-product, multi-party platform and offers simplification of origination services in lending products and financial services. The startup has developed features that meet the specific needs of its market, powered by its developed alternative credit scoring technology.

Early on, the company worked with unions to address financial inclusion challenges within the South African workforce. But then he began to venture into real estate financing in townships and rural areas, causing a pivot.

“Our lending products meet different market needs, with barnyard finance, taxi finance, home loans and vehicle finance. Traditional competition for home loans and vehicle financing varies from established banks to niche players, while backyard financing has less competition, especially as larger institutions consider township markets and rural as high-risk,” said Nkonzo Mbetha, managing partner at BlackPay.

“When it comes to our Lobola, Mshado, Mcimbi and Monate loans, there are no known players in the formal lending space except unregulated loan providers, making BlackPay a pioneer in space. Our extensive research informs us that there is a great need for structured financial products to meet the needs of the majority of the South African population, with various cultural practices established within black communities.

These loan offerings are supported by various local funds, banking partners and financial services institutions, with BlackPay accepting loans to communities that previously had little access to them.

“The adoption of backyard financing has been impressive and driven by a growing need for affordable housing in areas close to workplaces at the bottom of the pyramid,” Mbetha said. “We see this growth accelerating as the government struggles to keep pace with housing supply for the ever-growing market of people moving to big cities for better opportunities.”

The startup is exploring a pan-African strategy with financial institutions operating in markets with profiles similar to South Africa, mainly in SADC and East Africa.

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