Connecting Africa Podcast: S3 Ep. 6 - Building next-gen payment systems

On this episode of the Connecting Africa Podcast we are joined by Nader Abdelrazik, co-founder and CEO of MoneyHash, a company on a mission to reshape the quality of money processing technology in emerging markets as a way to help businesses scale.

MoneyHash is an Egyptian and US fintech startup and payment orchestration platform which was founded in late 2020. It uses a universal application programming interface (API) to help businesses consolidate and grow their payments and financial tech stack across the Middle East and Africa (MEA).

Abdelrazik is an engineer by trade and has a master's degree in development economics and international development. He worked with a number of payments and blockchain companies before starting MoneyHash with co-founder and CTO Mustafa Eid.

He began by telling us about how the idea for MoneyHash came about and why he and Eid wanted to build something new in the fintech space.

"Through our conversation, we discovered that every single API we interacted with, that is related to payments, was very unsatisfactory. We were really frustrated by the technical maturity issues that are faced by merchants in the region, and we felt like the region deserves a significant upgrade from a technical infrastructure point of view to a very critical piece," he said.

"We deal with payments like it's a plumbing [issue]. Everyone deserves hot and cold water when they want it in their house. So, this is how we [saw] payments, the pipe should be working efficiently, you should not have any leakage and you should have consistent pressure. This is kind of where we were coming from," he explained.

The rise of payment orchestration

The company aims to simplify the process of building and maintaining payment functionalities by providing an agnostic cloud that aggregates all payment APIs, features and technical capabilities.

"We're building a new category. When we started payment orchestration, even the term itself, didn't exist. There were a couple of companies that did what we call agnostic tokens, or token card storage globally, but there wasn't anything in emerging markets, it was only starting. I remember we even had an interview with [startup accelerator and venture capital firm] YC in which YC itself was learning how this new system works. We were one of the first three companies to even open the topic with YC ever," he said.

The team discussed the rise of the payment orchestration category in recent years as fintech companies shift from merely handling payments and remittances to managing payment systems for merchants and other larger businesses.

Abdelrazik explained that in the banking and fintech ecosystem in MEA there are a lot of companies that build infrastructure for payment rails on the banking side, but very few provide infrastructure on the merchant side, something MoneyHash is trying to fix with an intelligent mechanism that customizes the experience for the merchant.

The conversation shifted to fragmentation in Africa's payment landscape, usually seen as a negative thing, but Abdelrazik believes fragmentation is happening for a reason because fintech is such a vibrant, exciting space with so much innovation going on.

He does, however, believe this fragmentation could hinder merchants, because they do not have the capacity to implement all of the new payment technology options in real time without help.

"The role we're trying to play, and also I think companies like open banking, and cross border and FX aggregators, we're trying to guard and future proof the merchants [to be able to] grow as much as they need. Without needing to worry about what's happening in the ecosystem," he explained.

"[As a merchant] you can still deliver reliable, sophisticated, knowledge-driven components into your infrastructure, that adapt to this on your behalf. You can have a specialist, you can hire a chef in your own kitchens that creates these meals for you rather than you needing to all of a sudden learn how to cook with all of these things," he went on.

Mustafa Eid, MoneyHash co-founder and CTO; Elena Panchenko, MoneyHash chief product officer; and Nader Abdelrazik, MoneyHash co-founder and CEO. (Source: MoneyHash)

The topic of competition in the fintech ecosystem was brought up and how different fintechs view their competitors or partners in an ever-evolving sector.

"If you don't work inside the payment ecosystem it's very confusing to understand. Because if you look at the model of the payment processing itself, everyone inside the chain is offering products that compete with each other while [at the same time] partnering together," Abdelrazik stated.

"I do believe that everyone offers a distinct value proposition that the merchant has to pick and choose in terms of how they want to get deeper into particular features. We do believe we're an enablement layer, and this enablement layer has to be inclusive of everyone. It should not have biases or restrictions on the merchant," he added.

Pan-regional promises

Abdelrazik shared his experience working across different markets in Africa and the middle east and how neighboring countries not only differ to each other but how you even find completely different payment landscapes within countries themselves.

"We're counted as an Egyptian company because we're Egyptians, and the majority of the technical team is in Egypt, but we are a pan-regional company. Our first payment integration we did was for a Saudi company expanding into Nigeria," he said.

The MoneyHash team works remotely from nine countries across Africa and further afield and he said that it prides itself on being pan-regional from a team and culture perspective, from a market base perspective, as well as pan-regional when it comes to infrastructure.

"Very few companies in the region build pan-regionally, and claim proudly that they can build for the whole region, all at once. This is usually a bad decision as a startup and it only makes sense if you did it from the beginning correctly," he explained.

"In our case, [in the first two years] we did hundreds of API integrations across over 40 markets in the region, because from the beginning we knew that the payment nuances of every single market were different. If we're going to claim we are a software company that will help fix payments for Africa and the Middle East, we have got to understand how Africa and the Middle East works in every single market and every single payment rail. So, we walked our talk," Abdelrazik stated.

Founder joys and frustrations

When it comes to company milestones to be proud of the founder said that its less about the deals and the PR and more about the talent the company is attracting into its ranks.

"It's a big milestone for me every time we hire a senior talent, it feels like something worth celebration, especially if they are a very capable senior talent, and especially if they are a diaspora talent. So if they lived outside of the region and went on an exploration journey, and now they will come and work for MoneyHash and benefit the region again. It really touches me, given that I personally, went outside of the region to seek education and a learning experience, and now I'm really excited about rebuilding in the region," he said.

He commented on the power dynamics that exist in within the venture capital space and startup ecosystem as well as the challenges startups face when building a company in a new category.

"We had this fantastic privilege to build originally, to build our own ideas without needing to stick to any other building model or to imitate any other building model. We got a lot of exciting investors that joined us and believed in our vision, but that was a 1% of the 99% that told us we're crazy," he said.

He shared the frustration that founders like himself feel whenever they approach the market, meeting resistance for having an original approach or strategy and being told they need to follow a best practice created by someone else, rather than trying original experiments.

More Connecting Africa Podcasts

This season we will be speaking to more startup founders and interesting personalities in Africa's tech ecosystem so stay tuned for the new episodes dropping soon.

If you want to catch up on all the previous episodes you can find the podcast on Apple Podcasts; Spotify; Pocket Casts or find other podcast platform options on our main page on Spotify for Podcasters.

You can also find the podcast hosts online here:

Paula Gilbert - @paulajgilbert

Tobi Lafinhan - @TobiLafinhan

Matshepo Sehloho - @tsokamatshepo

Related posts:

— Paula Gilbert, Editor, Connecting Africa