Lemonade Finance, International Money Transfer Startup Launches in Africa

Alt: = "2 men standing behind Y Combinator signpost"

Lemonade Finance is an international money transfer app, founded in October 2020 by a Nigerian startup, Ridwan Olalere.

Despite multiple international remittance operators and application available for Africans to move money in and out of the continent, processing international payments is still cumbersome.

Lemonade Finance is intended to ease the payment process for Africans in North America and Europe. The founder Ridwan Olalere says he left his job as Country Head of Uber Nigeria, and collaborated with Rian Cochran, former Director of Finance at Opera Software AS, to  build  “a borderless money app for Africans”

The startup has just raised a pre-seed funding of $725,000, with participation from Y Combinator and the venture capital firms, Microtraction, Ventures Platform and Acuity Venture Partners, among several other individual investors to be able to extend its service operations to Africa and to more Africans in diaspora

Dayo Koleowo, Managing Partner at Microtraction, one of Lamonade investors says “Lemonade’s solution is very timely. As a multi-currency financial service provider, they make it easy for the African diaspora to send and receive money from their new country of residence, which is remarkable. We believe Rian and Ridwan have the technical and financial know-how to provide the number one cross-border neobank for Africans in the diaspora.”

What difference will Lamonade Finance make international remittances in Africa?

Alt: = "screenshot of Lemonade Finance website homepage"

When Africans want to send or receive money to or from their family, dependents, children studying overseas, or businesses domiciled in Africa, they have few options and encounter problems.

Before Lemonade, Western Union, MoneyGram, PayPal Payoneer, are some of the international transfer service providers Africans use to process payments. However, these operators are typically expensive, time consuming as it takes weeks to process payments, and restrict users from certain locations from using their services. For instance, PayPal allows Africans living in Africa to send ou money but not receive money. 

With Lemonade, users will not  have to go to the bank, and within minutes, they can send and receive payment without restrictions.

To allow Africans to use their money seamlessly, Lemonade Finance has provided Africans with flexible access to currencies that matter to them, notably the currency of the country they are in and that of their home country.

This is a big deal for Africans in diaspora who have businesses in Africa and want to move their money in foreign currencies. Currently, if an African wants to change their foreign currency to that of the home currency in order to friends, family, they have to deal with unfavourable rates and the length of time it takes for the exchange to take place. Lemonade offers you flexibility on your funds.

Olalere and his partner, Cochran say that the flexible solution Lemonade provides is intentional and at the core of the team’s thinking in building the app, and wants to ensure that Nigerians who resides in the UK or US, for instance, can open a Nigerian account and save money in naira as well as pounds without leaving the UK or US.

 “Before now, when Africans living in Africa moved to the diaspora, they could only create a bank account with the currency of their new country or the US dollar. While some can use their phone numbers to operate an African bank account, like with Guaranty Trust Bank (GTB), others have to travel back home to renew their token,” said Olalere. 

Lemonade Finance faces regulatory and compliance problems. The startup has to go the extra mile to prove they are worthy of licenses in European and North American countries. This is because global banks have put African countries on a restricted list, preventing individuals and payments companies from sending money to Africa. 

But Lemonade Finance is dedicated to breaking financial barriers in Africa , and to show other international money transfer operators that lowering financial barriers into Africa is a beneficial and strategic move. It has been able to convince some of their partner banks to green-light Nigeria, Kenya, Cameroon and some other West African countries. 

Some of the global banks  which already enabled this financial access charge customers making transactions to African countries a higher fee. They also place restrictions on the number of days or hours it takes for the money to reach Africa. 

“On a daily basis, what we are constantly doing is fighting for everyday Africans to be globally included financially,” Olalere said. 

Olalere disclosed that the company’s biggest milestone happened earlier this year when they acquired a license in the UK, approved by the FCA online, without stepping foot in the UK.

This is why this funding round, according to Olalere, is important. It will help them upgrade and get new licences like the VMI license that allows them to hold wallets. This funding round will also help them hire for roles in the regulatory and compliance department, which will ultimately increase their customer base and allow them to reduce fees for customers. 

Lemonade Finance is only available in Canada at the moment, where it has gained thousands of users already. In a few weeks time, Lemonade will allow users in the UK to send and receive money from Ghana and Kenya; and in December, customers in the US will be able to send and receive money from over 10 African countries at once. 

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