Bitmama, a leading crypto-focused fintech in Africa, has announced the suspension of its virtual MasterCard services. The decision comes in response to unexpected challenges with its card provider, marking another instance of fintechs grappling with operational hurdles in Africa’s volatile financial landscape.
In an email to its users, Bitmama explained that the suspension was necessary to safeguard its customers. “Due to unforeseen issues with our MasterCard virtual card provider, we decided to pause our partnership with them,” the company stated, emphasising the difficulty of the decision but affirming it as the right move to protect users. As part of the process, all balances on the suspended cards will be refunded to users’ Bitmama wallets.
The card service was a defining feature for Bitmama, which has positioned itself as more than a crypto trading platform. By enabling users to make everyday payments through virtual cards, the service offered a practical bridge between crypto and real-world transactions. With its suspension, the company faces the challenge of innovating new solutions to retain customer loyalty.
A Growing Trend in African Fintech?
Bitmama is not alone in facing disruptions to its card services. Earlier this year, Nigerian investment platform Rise halted its virtual card operations, citing fluctuating exchange rates and provider-related issues. Similarly, in June, Carbon became the first fintech to publicly suspend its card services in 2024, with co-founder Ngozi Dozie describing the launch of debit cards as a gamble that often yields limited returns in a crowded market. Although, the company has seen restored the service after a six-month pause.
The broader problem seems to lie in the operational and economic pressures facing fintechs offering card services. Union54, a major card provider for African fintechs, discontinued its services in 2022 following a surge in chargeback fraud. Other players like Chipper Cash have implemented fees for declined transactions caused by insufficient funds, highlighting the mounting costs associated with maintaining seamless card services.
Industry experts point to multiple factors complicating virtual card operations across Africa. Fluctuating exchange rates, chargeback fraud, and the high operational costs associated with managing card infrastructure have made it difficult for fintechs to sustain these services. Adedeji Olowe, CEO of Lendsqr, explained that the primary issue is balancing high costs against limited revenue opportunities.
For customers, declined transactions due to insufficient funds remain a significant concern. Fintechs like Chipper Cash have responded by imposing a non-refundable fee for such occurrences, preferring risk mitigation over user convenience.
What’s Next for Bitmama?
For Bitmama, the suspension of its virtual card service raises questions about its next steps in an increasingly competitive market. The startup has built its reputation on offering innovative crypto solutions that extend beyond trading, but this setback underscores the fragility of fintech operations in Africa.
To maintain its edge, Bitmama will need to explore alternative features or partnerships that align with its vision of crypto-enabled financial accessibility. As the industry continues to face operational challenges, the ability to innovate and adapt will determine which players thrive in Africa’s evolving fintech space.
