African financial institutions often use a combination of local and foreign technologies to scale their solutions. Appzone is one of the prominent fintech software providers in the local banking and fintech space, offering better pricing and flexibility.
Nigeria-based Appzone has been an enabler in the banking and payments space (payments rail and core infrastructure) for over a decade, building custom software and software-as-a-service products for over 18 commercial banks and over 450 microfinance institutions Banks across Africa, including Ghana and Kenya.
In 2022, the fintech software provider founded by Emeka Emetarom, Obi Emetarom and Wale Onawunmi decided to innovate itself by delving into blockchain technology and integrating it with traditional banking and payment systems. As a result, it changed its name to Zone, a permissioned blockchain payments infrastructure company, and spun off its original banking-as-a-service business into a separate company, Qore. Today, Zone, its blockchain network that supports digital currency payments and acceptance, announced it has raised $8.5 million in seed funding.
The concept of Zone is simple: it recognizes that Africa’s current payments infrastructure may not be suitable for the transition to a cashless future (which may take some time). As a result, fintechs are developing an interoperable payments infrastructure that uses blockchain technology (known for its ability to scale infinitely) to connect banks and fintech companies to facilitate intermediary-free transaction processes.
In an interview with TechCrunch, CEO Obi Emetarom said that Zone is Africa’s first regulated blockchain payment network and has signed up more than 15 of the continent’s largest banks. Currently, the company is processing domestic transactions for seven of the banks through the ATM channel, which is one of several payment channels for initiating transactions in Nigeria, including POS, funds transfer, online and direct debit.
The eight banks are in various stages of implementation, as the onboarding process can take up to six months due to internal procedures such as setting up a staging environment, testing and obtaining management approval, the CEO said.
Before going online, Zone has obtained an exchange license from the Central Bank of Nigeria (CBN), the country’s top bank, and is connected to the Nigeria Central Exchange System (Nigeria Interbank Settlement System), which is responsible for interoperability among various participants in Nigeria. The country’s financial system and the rapid movement of funds between bank accounts.
Since central exchanges mainly handle funds transfer exchanges, some fintech companies, such as Moniepoint and OPay, have used direct card routing (DCR) to establish direct connections with card issuers, making POS transactions faster and with fewer glitches. This is Zone’s next target focus.
“We will introduce and roll out some new use cases this year. The ATM use cases are not incorporated into fintech because they do not deploy ATMs,” Emetarom said. “But POS brings use cases that fintechs are very familiar with, and to that end, we’ve also integrated with some of the big fintechs in the country.”
Emetarom explained that Zone is designed to help banks and fintech companies replicate the achievements of OPay and Moniepoint without the need for separate integrations. Zone has implemented these integrations and operates as a licensed switch, avoiding the risk of violating regulatory guidelines, he said. He added that the blockchain architecture is such that when a fintech connects to the Zone network, it provides a gateway as an environment through which its transactions are sent directly to the bank, to the issuer for authorization, and then return.
“The bank or fintech becomes a switch because they now have something in their environment that connects them to all the destinations they need to go to rather than going through a third-party switch,” the CEO noted. “So reliability Significantly higher because we don’t have to rely on any intermediary and the fintech can control their switch because it sits on their server or cloud environment.”
regional team
Reconciliation and instant settlement are other imminent applications of Zone blockchain technology, Emetarom said.
For example, when a transaction fails and a customer is charged, there is a lengthy reconciliation process before a refund is issued, often taking days or weeks. Zone’s decentralized architecture will allow for automatic reconciliation and adjustments when discrepancies arise, providing customers with immediate refunds without requiring them to report the issue. Additionally, its blockchain technology should provide transparency so that terminals and issuers have full visibility into transaction status.
Similarly, merchants will also encounter settlement delays when receiving funds; through Zone’s instant settlement function, funds will reach the merchant’s bank immediately after the transaction, solving liquidity challenges and ensuring smoother operations.
“Decentralized routing improves reliability and scalability and provides automated reconciliation to address chargeback fraud. Through Zone, we can coordinate transaction processing and settlement systems, which will be supported by settlement tokens.” CEO said, adding that the features would be rolled out pending approval from the CBN.
Africa’s payment switching and financial network landscape often relies on infrastructure ownership by banking consortiums. Private initiatives have had mixed success and few have gained significant traction outside of traditional banking; Zone is one of them, standing out for its experienced founders, instant processing client base and central bank mandate.
To date, Zone has processed transactions for more than 10 million cardholders at more than 6,000 ATMs. The fintech company processed more than $1 million in the first three months after launching its ATM use case.
This appeal has sparked excitement among investors. Flourish Ventures, a fund focused on global fintech, and TLcom Capital, a pan-African venture capital fund, led the round, which the startup said will help it launch more features and bring its network Coverage expanded to other payment channels. thereby meeting a wider range of customer needs. Additionally, the company charges no implementation fees and hopes to reduce the time needed to onboard customers (fintech companies and banks) in the coming months.
“Zone’s technology enables direct communication between payment ecosystem participants for the first time in Africa. We believe this is a fundamental leap that will allow customers to experience reliability, speed and cost efficiency at ATMs, POS machines and online. A new standard.” said Ameya Upadhyay, Partner at Flourish Ventures.
“We are excited about the potential for Zone’s technology to be replicated across borders to advance global payments innovation. The fact that Zone is led by Obi and Wale, both banking industry veterans, reinforces our belief that Zone can deliver A common goal for the entire industry to move forward.”
