Nigerian fintech startup, Lemonade is poised to lead the African remittances space

Lemonade, a Nigerian fintech startup, is by no means unique in its ability to help Africans abroad send and receive money to and from their home countries, but the startup believes it has a secret sauce that sets it apart from the competition.

Lemonade Finance, founded in 2020 by Ridwan Olalere and Rian Cochran and a participant in Y Combinator’s W21 batch last year, enables Africans living abroad to send and receive money from their home countries in an efficient, affordable, and timely manner. Its app allows users to keep their balances in the currencies that are important to them and easily convert between them.

The company provides instant local and international transfers to Ghana, Kenya, Nigeria, Canada, and the United Kingdom (UK), with no hidden fees, and international transfers are made at the current market exchange rate. The problem is that many other companies do the same thing, so what distinguishes a relatively early-stage Nigerian version?

“For Africans, cross-border payments are plagued by three major issues: long transaction completion times, usage restrictions, and steep fees.” Because of these issues, platforms for international transactions, particularly peer-to-peer, are either unavailable to Africans or have limited functionality,” Olalere told Disrupt Africa.

“For example, WorldRemit and TransferWise allow Nigerians to receive from other countries but not send.” PayPal does the opposite, allowing Nigerian users to send money but not receive it. When the international funds transfer option is available, the transaction could take up to four days to complete, as with Western Union. Aside from the delay, Africans frequently have to pay more than the global average.”

Lemonade believes it solves these issues by being faster, cheaper, and allowing users to switch currencies, and many people agree. The startup claims to have thousands of users across North America and Europe, and following its participation in Y Combinator, it raised a US$725,000 pre-seed funding round led by Microtraction, Ventures Platform, and Acuity Venture Partners.

Lemonade intends to expand to Ghana this year and has a number of new product offerings in the works, including bill payments and, most notably, its Cards feature.

“Users will be able to create virtual Naira and Dollar cards to complete transactions on local and international websites with this feature,” Olalere explained.

While Lemonade is not the first company to power this, it does have the advantage of allowing users to create an unlimited number of cards and earning rewards through its cashback program.

Customers will be able to use their cards to pay for global services such as Apple Music and its related services, Netflix, Spotify, Amazon, PayPal, and GooglePay, according to Olalere.