- Chari has raised $12 million
- Will provide ‘banking as a service’
- BaaS market worth $65bn by 2032
One of Morocco’s leading startups is using its ecommerce platform as a “Trojan horse” to open the door to wider financial services for the country’s retailers and fintech sector, while also reaching millions of informal-sector workers.
Chari, a business-to-business ecommerce and fintech firm, aims to use this foothold to expand into banking-as-a-service (BaaS), offering businesses in Morocco the chance to provide financial services to customers without needing their own technology stacks or payment licences.
The company raised $12 million in October in Morocco’s largest-ever Series A round, bringing its total funding to $17 million.
Chari built its reputation as an online portal for businesses such as retailers to order and manage their inventory, but it is now the launchpad for its fintech ambitions, co-founder Ismael Belkhayat told AGBI.
Ecommerce has helped the company build a large and trusting client base and to understand the financial challenges Moroccan businesses face, but the real opportunity is using Chari’s payments licence to provide BaaS, Belkhayat said.
BaaS operators use their licences to let intermediaries offer financial services without needing their own licence or technical infrastructure. The BaaS provider supplies the underlying technology, which third parties can brand and deliver to customers as their own.
Chari is the first VC-backed startup in Morocco to be granted a payment institution licence by the country’s central bank.
The payments licence means Chari can offer services including issuing Moroccan IBANs – an international account number that identifies a specific bank account for transfers – providing debit cards, facilitating domestic and international remittances and offering micro-insurance products.
For example, a fintech company that wants to offer earned wage access could plug into Chari’s technology rather than build its own. Earned wage access lets employees withdraw part of their accrued pay before payday, with the employer or partner platform advancing the funds and settling later.
Similarly, with Chari’s technology, grocery stores can begin offering financial solutions such as remittances or digital and bill payments in-store.
Zazu.ma, for example – a Morocco-based fintech micro- and SME lender that raised $1 million in pre-seed funding in early December – used Chari’s BaaS services to build out their product, Belkhayat said.
“Our ambition is not only to build our own fintech, our ambition is to be the fintech enabler,” Belkhayat said.
BaaS is growing, with the global market valued at nearly $16 billion in 2023 and expected to expand to nearly $65 billion by 2032, according to a Bank of New York Mellon report last year.
Egyptian fintech Fawry, a “unicorn” valued at more than $1 billion, offers similar services and has become one of the region’s most highly valued startups. Chari recently appointed Fawry co-founder Mohamed El Sayed Okasha to its board as it looks to mirror the Egyptian firm’s trajectory.
Know your customer
Morocco and Egypt provide opportunities for BaaS providers to grow because of their large informal economies and reliance on cash. In addition, fintechs can leverage data and information to address “know your customer” (KYC) challenges – the standard banking process used for verifying identity and assessing risk.
“The Middle East’s informal economy is to a large extent ignored by incumbent banks, because these workers and micro-businesses lack credit files, rely on cash and face heavy KYC friction,” said Mohammad Nikkar, principal at management consultants Arthur D Little.
Across the Middle East, fintech companies have stepped in to provide financial services to informal or underbanked populations. With lower overheads than traditional banks, fintechs are managing to make profit where larger banks cannot, CEO of management consultancy 3D Advisory and AGBI columnist Suvo Sarkar previously told AGBI.
BaaS enables companies such as fintechs, telcos and gig-economy platforms to offer financial services to unbanked users. They can integrate checks through mobile e-KYC systems linked to national identification. This allows customer information to be captured instantly and used to underwrite risk using alternative data such as receipts, gig-economy earnings and mobile top-ups.
For example, a delivery rider in Marrakesh who was previously invisible to banks could now access finance through the same app he uses for work, because BaaS providers can build financial services directly into that platform.
Further reading:
Further reading:
“The products can finally match the realities of informal work, whether that is daily settlements for delivery riders or small working-capital tools for market traders,” Nikkar said. Across the region, 10 to 15 million informal workers and 2 to 3 million micro-businesses become reachable, he added.
Belkhayat said Chari is targeting acquisitions with the $12 million it raised, looking to buy promising companies and bring on board their best-performing staff.
“If we want one day to build the first unicorn of Morocco, we will need to be surrounded by some of the best. And the best way to do it is through acqui-hire [acquiring a company primarily to hire its employees] and M&A,” Belkhayat said.
