Cards are gaining ground in Egypt, with over 30 million in circulation (prepaid cards, particularly, are seeing more use than debit and credit cards combined). This surge in card usage, about 14% in the last four years, is primarily due to the incentives introduced by fintech companies and banks, attracting millions of Egyptian consumers who previously relied mainly on cash for their transactions.
The adoption of corporate cards tells a different tale. Businesses of all sizes have hesitated to embrace corporate cards because of limited access and inadequate spending controls over their usage.
Traditionally, banks have been the primary providers of corporate cards across the country; however, fintech companies are now entering the scene to boost adoption. Swypex, one such fintech that’s offering corporate cards and management tools for businesses, raised $4 million, which it will use to expand its business and technical capabilities of its platform.
Image Credits: Swypex
Around 3.8 million businesses in Egypt face challenges with complicated and rigid financial systems, according to a UNDP report. Like many across Africa, these businesses are using multiple disconnected methods to handle their finances, causing inefficiencies. Employee fraud is also a problem, with businesses losing an average of 5% of their revenues yearly to fraudulent activities that often arise from cash transactions like asset misappropriation and financial misreporting.
Gearing up for launch
Yet, there are significant tailwinds from a regulatory perspective; for instance, Egypt’s apex bank, the Central Bank of Egypt (CBE), launched initiatives such as the Instant Payment Network (IPN) to reduce cash-based transactions and encourage digital payments.
Several fintechs in Egypt, including Swypex, are leveraging such initiatives to launch necessary financial services while adhering to the central bank’s guidelines. CEO Ahmad Mokhtar explained that the startup, founded in early 2022 but only emerging from stealth mode now, dedicated its first year to acquiring essential licenses, ensuring regulatory compliance, and collaborating with payment processors and bank sponsors. Swypex then rolled out the beta version to 100 customers last December.
“We spoke to hundreds of different businesses, from startups to SMEs to large corporations, enterprises, and publicly listed companies, to understand what their challenges were at different stages,” said Mokhtar, who launched the startup with Tarek Mokhtar (CPO) and Sasan Hezarkhani (CTO), on the problem Swypex is tackling. “We realized there were specific pains shared that haven’t been met for the last decade or two, like businesses predominantly using cash and losing visibility over their money or using banking services that were a little bit archaic, so they had to visit the banks a lot to sign physical papers and documents to get things moving for their businesses.”
All-in-one financial management platform
Mokhtar said Swypex provides businesses with an “unlimited” number of corporate cards for their employees. The platform enables these businesses to set smart controls to manage spending, such as setting different limits and specifying usage permissions for ATM withdrawals and online transactions. After transactions, employees can upload receipts, invoices and spending details, which are consolidated into a centralized dashboard with integrated data from the government’s e-invoicing platform. In addition to ERP and accounting software integrations, Swypex offers businesses a streamlined and comprehensive overview of all expenses and spending in a single location.
“Businesses using our platform can see analytics around the distribution of spend on each department, merchant, individual and category level,” said Tarek Mokhtar, the company’s chief product officer.“We also categorize all the expenses on the platform to give profound insight into a business’s financial health and each line item, which will help businesses make more data-driven decisions based on the real-time visibility we provide them with.”
Swypex’s competition in the corporate card space across Africa includes YC-backed companies like Boya and Bujeti. In Egypt, it’s banks such as HSBC and National Bank. Mokhtar argues that Swypex is a better option for businesses because it allows for more customization in its offerings and provides a broader range of features and services, including unlimited card issuance and advanced controls. “Our focus on things like user experience and instant controls over these cards like blocking them, and having all of that automation built in, is fundamentally new to the market,” the CEO said.
The 2-year-old all-in-one financial management platform, which offers businesses its first three cards for free, generates revenue from interchange fees, floats and FX markups.
Corporate card surge in coming years?
Accel, the storied venture capital firm making its first investment across the MENA region (though it has backed an African money transfer app), led the $4 million seed round in Swypex. Investors who participated in the round included Foundation Ventures, The Raba Partnership, and other angel investors.
It’s significant for a startup just emerging from beta only after a few months, especially in a challenging funding climate where traction and revenue are priorities. But there are good reasons why it attracted investment even before its official launch: Swypex’s potential to address a sizable market (it’s targeting a portion of the card and payments market worth over $10 billion and expected to grow at a 10% CAGR over the next three years), as highlighted by Mokhtar, along with the founders’ backgrounds in developing products at scale for global companies like Twitter, PlayStation and Spotify.
“As the payments space continues to digitize, the opportunity to provide modern fintech products to Egyptian businesses has become even more important,” said Richard Kotite, vice president at Accel, in a statement. “Ahmad, Tarek and Sasan have spotted a gap in the market for a comprehensive B2B solution that addresses many of the key pain points businesses regularly face while driving a step-change in efficiency. We see a real opportunity for Swypex to become a fintech champion across the Middle East. The team is technically experienced and highly ambitious, and we are delighted to be joining them on this journey.”
