Stitch, a South African-based payments and data API fintech, has announced the launch of its new product, LinkPay. The product will simplify bank transfer payments for merchants in South Africa and Nigeria.
LinkPay utilises variable recurring payment (VRP) APIs which is the first of their kind in Europe, the Middle East, and Africa (EMEA) region. VRPs is an open banking API that allows consumers to authorise third parties to securely initiate payments from their bank accounts. Open banking is the set of technology that allows third-party financial service providers to access and build new products around consumer banking information.
By implementing commercial VRPs in Nigeria and South Africa, Stitch has unlocked secure and instant direct debit from connected bank accounts without the user having to repeatedly log in to their bank app for every transaction. In practice, it is similar to how credit and debit cards are tokenised to hide sensitive cardholder data and power instant card payments.
LinkPay uses secure encryption technology to connect to users’ financial accounts and enable instant bank transfers. In practice, shoppers or users can choose to securely link their bank account as a default payment method by logging in through Stitch. Once that happens, users can checkout or top up their wallets with just one click.
After expanding into Nigeria early last year, Stitch secured $21 million in Series A funding in February to build its API infrastructure and embedded finance platform. In a statement sent to TechCabal, Stitch Chief Product Officer Junaid Dadan said, “With LinkPay, Stitch can enable businesses to offer a more frictionless and secure payments experience, making it easier than ever for their customers to pay – and saving on costs.”
Prior to LinkPay, only credit and debit cards could be tokenised and saved on file for later use. Now, encrypted bank accounts can also be saved and used for repeat transactions in much the same way Google Pay works for online transactions.
The implications of one-click bank transfer payments are huge, from improving customers’ digital buying experiences to potentially reducing opportunities for card fraud and significantly lowering transaction fees for businesses compared to card payments— all because LinkPay bypasses card networks and traditional payment intermediaries.
In Nigeria, for example, if a user wants to make an instant purchase with a bank transfer, they usually have to log into their bank app or copy and dial auto-generated USSD codes. LinkPay allows businesses to offer customers the option of bypassing the tedium of using USSD codes to make transactions.
According to Stitch, South African businesses that integrate LinkPay also get free access to its Financial Data product to enable verified payments, and account balance checks for 3 months.
When used with other Stitch products like Stitch Payouts and Financial Data, merchants will be able to offer customers the option of using their linked bank accounts to make instant payments, request refunds, or withdraw money, the company said. “Our next step is to compliment that pay-ins product by allowing people to payout, which means that you will not only be able to fund your wallet as a consumer but also withdraw your funds in a convenient way. As a merchant, it means that once you receive your money, you will be able to move it around to your suppliers,” said Dadan.
