As more individuals use the internet for the first time, mobile penetration in Africa is impressively rising at roughly 46%. As a result, there are more opportunities on the market for entrepreneurs, particularly those in the fintech and e-commerce sectors, which aim to address the demands of the general public in terms of finance. But in order to achieve that, these companies need to perform several identification checks and KYC to fight fraud, among other things. Numerous platforms fuel these KYC procedures, and Identitypass, one of them, recently announced that it has secured $2.8 million in initial investment, months after leaving Y Combinator. The firm secured $360,000 in pre-seed capital in November, increasing its total funding to $3.1 million. The round also occurs shortly after that.
According to reports, cybercrime costs African firms $4 billion yearly. $1 trillion is the total cost of this incident worldwide. As a result, fintech companies and other digital enterprises in Africa must do thorough KYC and client verification checks. But the founders of Lagos-based Identitypass weren’t motivated to create the business by a desire to lower the high rates of fraud. The team first created a platform that required customers to utilize cards and biometrics (facial, fingerprints, or voice) in order to make payments, according to co-founder and CEO Lanre Ogungbe. However, they ran into difficulties when doing verification checks when building the platform. Hence the choice to change course.
Nobody on the market had the type of infrastructure we needed to employ at the time we were constructing it [the payments solution]. We set out to provide a replacement for authentication. That was it, the CEO said in an interview with TechCrunch. As demand for solutions to fraud and identity challenges increased in that market, the team contacted fintechs to learn more. The overall suggestion, according to Ogungbe, was to establish up an internal compliance team and implement transaction criteria. To conduct transactions exceeding the threshold for the latter, customers would have to pass further investigative checks.
Due to the fact that consumers only had to provide a small number of data points during the onboarding process, several of these fintechs did not exactly have strong KYC standards. Ogungbe, who co-founded the business with Niyi Adegboye, Ebuka Obi, and Tolu Adetuyi last year, stated, “We knew it would never work for us.” “Although we now only have the most basic authentication methods, such as OTPs or four-pin passwords, we wanted to expand the market by launching Identitypass.” Next, Identitypass contacted several national agencies and authorities to get the licenses and certificates necessary to approve checks at a wide range of verification locations. In January 2020, it was introduced with just one piece of data.
However, 200 active companies in the financial, e-commerce, education, and mobility sectors are now able to link to 18 data sources to confirm the identity of their clients on the platform. These companies have offices in Nigeria, the United Kingdom, Kenya, the United States, and India. The chief executive stated, “The basis of our company is enabling digital enterprises in Africa to simply check and confirm that their consumers are who they say they are.” The creator of Identitypass said why the company considers several different data points: “Before we entered the market, someone could choose another person’s BVN and use it to appraise a lending facility.”
However, thanks to technology like ours, we are able to perform this type of verification to determine that the individual providing the BVN, phone number, or bank information isn’t the owner. Since its debut, Identitypass has handled over 1 million different verifications. These end points are forms of identification recognized by the government, including national identification cards, licenses, passports from other countries, bank verification numbers (BVN), phone numbers, license plate numbers, debit cards, security watchlists, and tax histories.
The identification and verification platform costs between 10 cents and 20 cents for each verification it conducts, depending on how many end points a company connects to. The two-year-old business just introduced a SaaS platform in addition to its APIs. According to Ogungbe, Identitypass has an edge over similar companies in the industry, including fellow YC-batchmate Dojah and older firm Smile Identity, thanks to this new offering, which is software rather than a plug-and-play solution.