NALA Money, the Tanzanian cross-border payments fintech for businesses and consumers backed by Bessemer Ventures and Accel, has announced plans to make Rwanda a settlement hub for its remittance activities in East Africa. Making Rwanda a settlement hub means that all international money transfers that Nala processes for beneficiaries in East Africa will first complete in Rwanda before being settled into the accounts of beneficiaries in the region.
In June this year, Flutterwave, one of Africa’s most valued private fintechs, announced a similar plan after acquiring a payment service provider (PSP) license in Rwanda.
Nala Money, which allows residents of the UK, Canada and the US to send money to 9 African countries, recently acquired a license from Rwanda’s apex financial regulator, the National Bank of Rwanda. The license will allow the company to cut out middlemen and offer cheaper international money transfers, Nicolai Eddy, Nala’s chief operating officer, told TechCabal. “This means we can consolidate payment channels ourselves,” Eddy said. “We want to go further and a PSP license also means we can process remittances for third-party providers and integrate with local banks and telcos.”
A PSP license in Rwanda means NALA can offer money transfer services through established players like Western Union, potentially opening a new front of distribution and customer acquisition for the company. Previously, a fintech like NALA had to rely on payment aggregators like Cellulant, DPO Payment or Onafriq (formerly MFS Africa) to disburse payments to its customers in Rwanda. According to the World Bank, remittances as a percentage of GDP reached 3.6% ($474 million) in 2022. In total, Kenya, Uganda, Tanzania and Rwanda received around 6. $36 billion in remittances last year, according to World Bank data. watch.
Rwanda hopes to become a leading hub for financial services companies. The Rwandan ICT Ministry’s 2022-2027 fintech plan says it hopes to build “the narrative that Rwanda is the gateway to enter the African fintech market.” Some of the continent’s biggest fintechs already operate in the country, with ChipperCash and Paystack being the most recent entrants.