Flutterwave, Eversend, and other Africa-based fintechs discontinued use of virtual dollar cards due to the processor’s susceptibility to fraud. Scammers could contact the card issuer and fraudulently claim that they never made specific purchases.

Why should we care?
This turmoil stems from the processing partner that these fintechs have in common: Union54. While fintechs like Flutterwave and Eversend compete with one another across use cases, their shared vulnerability through a partnership with Union54 suggests African fintechs are desperately looking for a broader and more resilient range of partners to work with. The lack of competition in the processing space may partially be the result of tepid VC interest. Tiger Global led both of Union54’s fundraising rounds—and, with its disastrous spray-and-pray strategy, Tiger’s poor returns on its Union54 investment may only further encourage VCs to stay away from this sub-sector. The tech sector experiences the highest rate of fraud out of any industry, according to PwC, which makes the base conditions for investment in payments-processing infrastructure all the more off-putting. But there’s a potential domino effect at play here. The Africa-based fintechs affected by Union54’s fraud problems say they will resume virtual dollar card services in the coming weeks; access to international services and distributors like Netflix and Amazon lies in a state of suspension in the meantime. It’s not just fintech taking a hit, but e-commerce as well.