Fintech
South African Fintech Raises $300,000 From Silicon Valley, New York Investors
Entrepreneurs Alon Stern and James Hedley founded TurnStay.
TurnStay.com, a South African fintech focused on the travel industry, has raised $300,000 from Silicon Valley and New York-based investors DFS Lab and DCG.
The company intends to use the funds to expand in Africa and build on the momentum it has gained so far.
Founded by savvy entrepreneurs Alon Stern, co-founder of Slide Financial, and James Hedley, co-founder of Quicket, TurnStay claims to radically reduce payment costs for African merchants and platforms in the travel and tourism sectors by leveraging the same “tricks” used by the world’s largest booking companies.
Stephen Deng, General Partner at DFS Lab, explains: “TurnStay is creating a much-needed offering for the travel and tourism industry in Africa, enabling significant cost savings for hospitality businesses across the continent.
“We believe the founders are the perfect team to address this opportunity, combining deep industry experience with a proven history of shipping market-leading products.
“DFS Lab supports founders who are using technology to redefine what is possible in African digital commerce. Not only does TurnStay fill a critical niche, but we believe what they are building will increase profits for the African travel and tourism industry.”
According to TurnStay CEO Alon Stern: “Securing funding from these US investors is a vote of confidence in our business model, which has already processed more than R50 million in transactions. TurnStay creates a localised payment experience, charging customers in their local currency using familiar payment methods when booking accommodation. TurnStay’s solution has reduced costs for some customers by 70% and halved the number of unnecessary failed transactions. With a better payment experience, sales conversion rates skyrocket.”
Getting paid in the travel industry can be expensive due to payment costs and commissions imposed by online travel agencies.
“The average merchant spends 12% of their revenue getting paid – this can often mean the difference between profit and loss and dramatically impacts the profitability of many businesses in an industry that employs over six million people in Africa,” explains James Hedley, founder of TurnStay.
For example, a European consumer uses Booking.com to book a hotel in South Africa, the company says.
The website charges the card in euros in Europe, where payment processing is significantly lower, with a fee of around 0.3%. However, if the hotel charges the guest’s card through an African payment company, the transaction fees could easily exceed 7%.
As a result, the company says, payment fees for African hotels could be up to 20 times higher than those of Booking.com.
TurnStay says it uses a global network of compliant companies to dramatically reduce the cost of international hotel payments without compromising security or efficiency, solving the problem where African hotels can pay commissions up to 20 times higher than those paid by online travel agencies like Booking.com.
The fintech says benefits for merchants include lower card fees, a better checkout experience and more direct bookings, allowing properties to compete with online travel agencies with improved conversion rates.