Remittances are a lifeline in many African economies and it’s why a proposed remittance tax by the Trump administration has triggered widespread alarm. But true financial inclusion for the African diaspora in developed countries will also require access to financial tools that migrants need to live well in those countries, not just for sending money to Africa.
Take credit cards. In Africa, less than 5% of people have access to one, compared to about two-thirds of the adult population in the UK where they are a part of daily life. Being without a credit card as a migrant can therefore be a huge disadvantage.
At the same time, good business requires efficiency. Startups setting out to offer credit cards to migrants will be smart to optimize their resources for efficiency, amid the slow recovery of global venture capital funding.
It appears to be the case with LemFi and Pillar, two startups that are each less than half a decade old and recognized that they could become potential competitors in a few years. Rather than spend years chasing a credit card issuance license from the UK’s Financial Conduct Authority, LemFi has used its large customer base to win over technology that may well take many years, talent, and hard-earned investor dollars to build.
“It’s basically combining all our marketing efforts into one umbrella and getting straight to the customer,” Bhatt said. “If we do not fuse together, we’ll end up competing and customers will get confused. It’s just messy.”
