Kotani Pay, a fintech startup based in Kenya, has successfully secured a substantial $2 million in pre-seed funding, a significant milestone in its journey to revolutionize offline cross-border crypto payments across Africa. The funding will be instrumental in expanding its operations to encompass Rwanda, Senegal, Ivory Coast, Tanzania, and Nigeria.

This pre-seed funding round was spearheaded by P1 Ventures and witnessed participation from notable investors, including DCG/Luno and Flori Ventures.

Founded in 2020 by a team consisting of Brian Kimotho, Daniel Kimotho, Felix Macharia, Samuel Kariuki, and Stephen Kiarie, Kotani Pay is a pioneering crypto payments startup on a mission to simplify cross-border remittances, particularly for Africa’s underbanked population. The solution it offers addresses the daily challenges faced by hundreds of millions of people, spanning countries such as Kenya, Ghana, Zambia, and South Africa.

Kotani Pay advocates for the use of blockchain technology to streamline remittances to Africa. It leverages stablecoins, cryptocurrencies pegged to fiat currencies like the USD, to facilitate cost-effective international money transfers compared to traditional methods.

One of Kotani’s noteworthy innovations is the integration of the Unstructured Supplementary Service Data (USSD) communication protocol. This middleware acts as a bridge between blockchains and regional payment networks, enabling individuals to send money even via feature phones without requiring an internet connection.

Kotani primarily operates as a business-to-business (B2B) solution, bridging the gap between crypto platforms with smart contracts on one end and mobile money APIs on the other. The startup has established partnerships with prominent crypto entities, including Yellowcard, DCG, Fonbank, Celo’s Valora, Mercy Corps, UNICEF Crypto Innovation Fund, and Stellar.

Moreover, Kotani Pay provides its users with the capability to convert their local currencies into US dollars, a feature currently tailored more towards businesses but with the potential for wider availability to retail users, subject to the necessary licences.

The revenue model for Kotani Pay revolves around charging an interchange fee, typically around 1% of the total transaction volume. To date, inbound payments constitute a substantial $23 million of all transfers conducted through Kotani’s platform, with an average transaction size of $150,000 due to the startup’s primary focus on serving businesses.

This significant pre-seed funding marks a pivotal moment for Kotani Pay, further propelling its mission to empower individuals and businesses across Africa with efficient and cost-effective cross-border crypto payment solutions.