Afrigather Nena Okon dreads going to work. Like many Lagosians, the 26-year-old content material creator lives on the mainland however works and rents digicam gear on the island—a busy district that hosts many companies. She will get to work utilizing the ever present Lagos danfos, which are sometimes costly and gradual.
In September 2023, Bus Speedy Transit (BRT), a well-liked public-private metro partnership, turned accessible on Okon’s route, coinciding with a time when the service was having fun with an improve. Whereas BRTs have been in Lagos for the reason that late 2000s, they received a refresh in 2018, introducing newer buses. In 2020, Cowry playing cards, a little-known product by Contact and Pay Applied sciences, a fair lesser-known firm, was launched. In 4 brief years, the Cowry card has change into an essential characteristic of commuting in Lagos.
The fintech is solely answerable for accepting funds on Lagos’ intracity transport system, together with the BRTs and Lagos Ferries. TAP can be the funds expertise supplier for the not too long ago launched Lagos Blue and Pink Strains, an intracity metro rail that stretches over 45km.
Key Takeaways
- Contact and Pay applied sciences has 3.8 million customers
- The Y-Combinator-backed agency needs to lift one other $4 million in funding
- Their income in two months was ₦1.9 billion
Cowry card, a contactless fee expertise, permits commuters to pay for bus and practice rides utilizing near-field communication (NFC). The cardboard retails for ₦500 in Lagos and has a pockets characteristic on Playstore for account top-up and airtime. The app additionally has a pay-with-phone characteristic however that continues to be an unpopular characteristic. Most commuters high up their playing cards from their financial institution accounts or by way of brokers.
The Cowry playing cards have two benefits, stated Okon, who’s now a daily consumer. First, it creates a better checking-in expertise, eradicating the rowdiness and commotion that may be a characteristic of commuting with the danfos whereas guaranteeing buses are much less crowded. Moreover, the Cowry playing cards, which customers can fund forward of their commute, are doubly helpful as Lagos state introduces extra mobility choices–final week, town launched its 37km pink line, a practice community that stretches from Agbado to Oyingbo.
In Nigeria, the place railway officers have been accused of ticket scalping on federal government-run trains, digital funds scale back corruption by metropolis transport employees.
The YC-backed firm behind Cowry playing cards
Cowry card expertise is the brainchild of Contact and Pay Applied sciences, or TAP, a startup based in 2017 by Olamide Afolabi, Michael Oluwole and Kabir Yabo to help funds for mobility providers in Lagos.
“Individuals don’t like that they’ve to fret over bus fare, battle bus conductors and undergo tough days. They only faucet, the quantity is deducted and so they transfer on,” Afolabi, TAP’s CEO, stated.
3.8 million customers in Lagos use Cowry playing cards to finish 500,000 journey funds every day, the corporate shared. TAP takes a 5-10% fee on fares and remits the rest to metropolis authorities.
“The fee we obtain varies for various states. In some instances, it’s lower than 10% and others lower than 5% relying on the amount, worth and shopping for energy [of state customers],” he added, noting that clients in some states don’t wish to spend as much as ₦200 for a 30-kilometre trip. The fintech is already increasing to Oyo, Ogun, Edo, and Kano.
Whereas TAP talks up its digital infrastructure, it additionally makes use of bodily brokers at bus terminals to promote playing cards to first-time customers. Most card steadiness top-up transactions are accomplished in particular person with these similar brokers.
TAP has raised round $4 million in enterprise funding from Unicorn Development Capital, a New York VC agency, and one other undisclosed funding quantity from True Capital Administration, a San Francisco-based multi-family workplace, in line with Crunchbase knowledge. In January 2021, the startup was accepted into Y Combinator, the storied accelerator program that boasts successes like Stripe, Flutterwave, and Paystack.
TAP is trying to scale to over 10 million clients and is planning to lift $4 million in a brand new Sequence A spherical of funding which it expects to shut by 2024.”
However TAP is just not the primary startup to try to unravel funds in Nigeria’s transportation sector. Gona, a China-based startup, tried to digitize fare funds for danfos. And prior to now, some startups had enormous success offering digital platforms for bike hailing. However these efforts by no means actually scaled, within the case of motorcycle hailing, had been killed by metropolis regulators.
Nonetheless, TAP has had a profitable run, in no small half as a consequence of elevated funding in transport infrastructure by the Lagos State authorities. Cowry Card was launched in 2020 when Governor Babajide Sanwoolu commissioned the Abule Egba-Oshodi BRT route.
It has remained in partnership with the state authorities since then, though it claims it has by no means obtained an funding from the state.
The BRTs transported 7.4 million passengers between the beginning of August and the top of September 2023 and transported a further 17,543 commuters by way of the ferries, amassing trip fares of practically N2 billion throughout this era, in line with an announcement from the Lagos state authorities.
“One factor is obvious: our digital fee platform [Cowry] is aiding us to collect helpful knowledge which is able to enable us to plan transport providers to the teeming individuals of Lagos State,” stated Abimbola Akinajo, Managing Director of the Lagos Metropolitan Space Transport Authority (LAMATA), which runs town’s mobility providers.
TAP is trying ahead
TAP is at present on the growth path and is making inroads into Ghana.
“Ghana is a vital market and a public transport market,” Afolabi says, declaring that Ghana has quite a lot of structural similarities with Nigeria. He additionally believes buyer behaviour is analogous throughout each markets.
“In Africa, we now have quite a lot of cell cash penetration in the event you go to Kenya and different nations, [and] If we are able to achieve Ghana with cell cash penetration, we can repeat the identical mannequin in different nations with cell cash penetration.”
Whereas TAP’s web site exhibits the corporate gives NFC providers for well being providers, occasion administration, and identification instruments, Afolabi stated the corporate doesn’t have plans to play outdoors the transportation house. He additionally inferred that Cowry card’s microtransaction use case may very well be helpful in different eventualities that don’t require enormous quantities of money.
If the corporate explores that use case, Cowry playing cards may energy retail funds at markets, surrounding outlets, and roadside merchants in 2024.
