Sending and receiving money to and from abroad has rapidly become a crucial aspect of people, businesses and economies. This has specifically been accelerated  by the ongoing COVID-19 pandemic, requiring people to electronically send and receive money. However, sending and receiving money is often marred by heavy transaction costs and processes, making it hard for people to easily transact money overseas.

To this end, financial technology companies like Chipper Cash have emerged to enable free and instant Peer-to-peer Cross-border payments in Africa and Europe. Chipper Cash also builds solutions for businesses and merchants to process online and in-store payments. We spoke to Leon Kiptum, the Country Director for Chipper Cash in Kenya, to get an in-depth understanding of money transfer, fees, licensing and future of mobile money platforms in Africa.

Tell us about yourself

My name is Leon Kiptum, I am the current country director for Chipper Cash in Kenya and Tanzania. My mandate also expands to forging partnerships in Rwanda and Uganda, including new markets such as Congo, Ethiopia, South Sudan and the larger East Africa. I have been at Chipper for about a year and 4 months. I have previously worked in the banking sector for 12 years, in which time I worked with 5 different banks, in different capacities. The last four of those years, I led digital transformation in Family and Sidian Bank.

Tell us about Chipper Cash

Chipper Cash is a money transfer platform. It was formed by two African partners who met while working in the US. The two identified a common challenge in affordably and conveniently sending money back to Africa. That’s when they came up with Chipper to solve this problem. The main aim of the app is to enable people in the diaspora to send money back home with ease. 

Most people struggle with the exchange rates when sending or receiving money from abroad. What Chipper has done is embed the exchange rate in the app, enabling clients to send money for example in dollars, and have it received in local currency. 

One of the biggest problems we are trying to solve is sending money across African borders. We noted that Africans are still highly dependent on banks and other platforms, so we decided to come up with an app that is multiuse. Chipper acts as a mobile money wallet that allows clients to send money, pay bills, buy functional stocks, etc. That is the problem we are trying to solve for Africans wherever they are with a simple download from Google play store or the App store.

Tell us about the markets you currently operate in

Currently we are transaction ready in Kenya, Uganda, Tanzania, the USA, the UK, Ghana, Nigeria, South Africa, and Rwanda. We are however not live in some of these countries purely because of regulations. We have 5 licenses in 5 countries and looking to get licenses in the other four. Some countries like the UK are send only because of the regulations and policies, this means that, as a Kenyan living in the UK, you can send money but not receive because of policy issues.

What is the status of licensing in Kenya?

There are different licenses in Kenya. Initially when we started, Chipper was not well guided until someone with experience joined the business. Initially we were operating in partnerships with companies who have licenses. The laws have since changed, and we had a window to apply for the required licenses for operations and comply with the new regulations.

To operate in Kenya you need two licenses which are, a Payments Service Provider (PSP) license which allows you to have a wallet. The other one is the International Money Transfer Operator (IMTO) License which we have applied for and we are waiting to be issued with because we have met all the requirements. 

What do you see as an opportunity for the business especially in Kenya given that we have cross border transactions and interest in stocks purchase in other countries?

A solution like Chipper comes at a time where there is need to send money locally and across borders. I think the opportunity lies with the recent signing of AfCFTA to open trade among African counties. I have to say that we are sitting on an opportunity where people across Africa can conduct businesses.

Transactions are now much easier with Chipper, as we have eased the general transactions of money for traders and SMEs across borders. The other opportunity is the numerous digital innovations and solutions. We can say that COVID-19 has also really exasperated the need for people to send money electronically. This way it is easier for us to send money amongst each other. We have tried to make our solution as affordable as possible. That is essentially where we see an opportunity for Chipper.

There have been reports that P2P transactions on Chipper is free. If this is true, how do you make money?

We offer free transactions from a fee perspective. One way in which we make money is through the exchange rates when someone is sending money across borders. We also get money from commission fees for services such as airtime purchase and purchase of stocks through our platform. We try to be competitive to banks, cross border payment platforms. There are also fee commissions when you buy stocks through the Chipper platform.

Other than licensing, what other challenges is the business facing?

We have a few challenges which include getting the right talent. Attracting talent is not easy for us as a startup. Some regulatory authorities like CBK require companies like us to have professionals that understand the business. Attracting this kind of talent and convincing them to join the team is a challenge. There is a general sceptism in joining the company, as some people still struggle with legitimacy of the business.

Another challenge is convincing the market that we are a legitimate business. We have to keep reassuring the market that we can take care of their money. Luckily, we are well funded by big names such as Amazon’s Jeff Bezos who invested in our business early last year. This kind of backing has helped to build on legitimacy of the business.

The other challenge is technology, essentially being able to build a secure platform. This means that we have to keep convincing the customer that we need regular upgrading of our product in a bid to make it secure. We have to keep reassuring them that they are dealing with a company that is well attuned to serving their needs as well as ensuring  smooth running of the business.

What do you see as the future of Chipper?

In my opinion, the future of money transfer is Chipper. We were recently valued at Ksh. 226 billion (USD 2 billion). If you look at our active markets, that is Kenya, Uganda, Nigeria and Rwanda, it is encouraging to see how clients have embraced Chipper. We also have very good uptake of the app and we are optimistic for immense growth in the next year.

As an industry, there is an opportunity for the solving money transfer problem which is prevalent. There are some companies that opt to focus on B2B, but we do P2P. The prospects for this industry are very huge, and anyone who builds a good solution will have an opportunity to play.