The round saw participation from Futuregrowth Asset Management, 4Di Capital, E4E Africa, Equitable Ventures, Summit Deals, the University Technology Fund and Felix Strategic Investments.

The Cape Town-based startup, with more than 600 000 registered users, is building what it calls an ad-subsidised payments network, a model that removes interest and fees from consumer finance entirely, shifting the cost of instalments to the merchants and brands that actually benefit from the resulting sales.

“Our mission is simple, to make cash-flow management free for consumers,” said Wesley Billett, co-founder and CEO of Happy Pay. “If we can connect the right product to the right person at the right moment and remove payment friction, commerce itself can fund the flexibility. That allows us to deliver installment payments without charging consumers interest.”

The model is a deliberate departure from traditional lending. Where most credit providers rely on interest, fees, or revolving balances, Happy Pay earns through merchant funding.

Retailers pay because flexible payments, paired with well-timed advertising, drive real commercial outcomes: higher conversion, bigger baskets, and access to new customers they wouldn’t otherwise reach.

An AI engine that connects discovery to purchase

Central to Happy Pay’s approach is an AI-driven advertising and distribution engine that matches merchants with high-intent shoppers in real time. The platform draws on behavioural signals, transaction data, affordability insights, and contextual cues to figure out what a user is most likely to buy, and when.

Those offers are then surfaced inside Happy Pay’s own app and pushed across partner apps, digital channels, and other touchpoints, moving consumers from discovery through to checkout with instalment payments already built in.

The key difference from standard digital advertising: Happy Pay optimises for completed purchases, not impressions or clicks.

Merchants pay only when a transaction happens. Consumers get interest-free flexibility at the exact moment they’re ready to buy.

The company describes this as a closed-loop model, one that pushes relevant products to users and drives them into both e-commerce checkouts and physical stores, turning marketing spend into trackable revenue rather than a bet on attention.

From BNPL product to commerce infrastructure

BNPL has taken off globally, but most providers still operate as standalone payment options bolted onto checkout. Happy Pay is going after something bigger: a commerce layer where advertising, payments, and financing work as a single, connected system.

Brands can promote specific products to targeted audiences. Merchants get incremental revenue. Consumers get flexible payments, all within one network. It’s as much an advertising marketplace as it is a financial product, sitting at the intersection of fintech, commerce, and adtech.

Built for markets where credit is expensive

In South Africa, consumer credit typically carries high interest rates and access to affordable lending remains patchy. Short-term instalment options have filled a gap as people look for predictable repayment structures that don’t saddle them with long-term debt.

“Our growth reflects a shift that’s been building for a while, toward financial tools that offer real flexibility without the trap of revolving balances. Traditional credit in South Africa is expensive, with the average credit-active consumer spending around 28% of their net income on debt repayments,” said Billett.

“We believe our model changes that equation by creating value for every participant. Merchants grow sales and acquire new customers, consumers gain access to cost-free cash-flow flexibility, and we build a business designed to deliver positive, long-term impact.”

“We’ve looked at most BNPL companies across Africa, Europe and the US, and we’re clear that the best model for creating true value is the one Happy Pay has built. BNPL only makes sense when it delivers real affordability for consumers while helping merchants improve conversion, grow their client base, build loyalty, and reduce acquisition costs.” said Matthieu Marchand, Principal at Partech

Funding to accelerate scale

The fresh capital will go toward expanding merchant partnerships, growing distribution across digital and physical channels, and continuing to develop the AI-driven recommendations and ads engine.

A bet that the future of consumer finance isn’t interest

“Finance has previously been monetised through the consumer,” concludes Billett. “We’re proving it can be monetised through value creation instead. When merchants grow, consumers shouldn’t have to go into debt to make that happen.”

Rory Bosman, Executive for Sales & Marketing at Ecentric Payment Systems adds that shoppers also want value from retailers, physical or online, when it comes to deciding where to spend their hard-earned money, especially in this difficult socio-economic environment.

As payment systems continue to develop, often building on offerings already in the market, Bosman details nine key trends he sees as dominating 2024.

1. Buy now, pay later

There will be a continued growth in offerings that allow consumers to purchase goods on interest free credit, paying the item off in tranches of, for example, three months. In this space, where the retailer carries the interest, there are an increasing number of solutions companies such as Float, Pay Just Now, Payflex, Happy Pay, and others.

Merchants are seeing an increase in purchases because of this solution, which allows South Africans access to goods that they usually wouldn’t be able to afford if they had to pay cash immediately.

Not paying interest is also very attractive for indebted South Africans who may need, for example, a new fridge because of loadshedding, especially if they don’t have access to a credit card (which comes with a high interest rate and is not always attractive).

2. PayShap

The instant interbank digital payment service, which offers smaller payments at low cost, is set to continue being a growth driver as more banks and participants join the network. While there hasn’t been large adoption yet, the addition of more participants such as the mobile network operators with consumers that have wallets, in what could be seen as a PayShap 2.0, will result in a large push forward.

When PayShap launched with only the big four banks, there were high fees that were individually set, which the competitive environment has pushed down, especially as challenger banks such as Tyme and Discovery Bank offer the service at no cost.

Delinking the product from the need to have a bank account will also result in more uptake.

Currently consumer-to-consumer, there is also the potential for consumer-to-business, which could bring retailers on board.

In China, there is a significant push towards instant payments, and – once that has been refined – could enable an interesting shift in the payments space. This is an area to watch for the fourth quarter of 2024.

3. Digital Wallets beyond South Africa

Outside of South Africa and across sub-Saharan Africa, digital wallet use dominates as a payment platform or technology, with customers lining up to enable this from the banking space through to cellphone operators.

In this region, we see relatively few banking and card transactions, while digital wallet adoption is surpassing that of traditional banking solutions. This is partially because of less population density, which doesn’t justify the cost of issuing scheme-accredited cards such as Visa and MasterCard.

4. Payment orchestration

This trend is relevant to the merchant, especially in the ecommerce world, where the merchant’s goal is to meet consumers at every touch point, by offering as many payment methods as possible.

However, they can’t always get all the required solutions from one payment gateway or a Fintech provider, which means there’s a cost imperative that requires them to be able to split their service providers.

Coming into this mix is a growing sub-industry in payment orchestration that pulls various payment methods together for the merchant, helping them grow so consumers don’t abandon their basket because they can’t check out in their preferred manner.

Interestingly, AI is starting to play a role in this solution, intelligently working out routing rules and determining which is the best time of day to transfer money.

5. Last mile deliveries

The COVID-19 lockdown led to a change in lifestyle in terms of people shopping online and having items delivered to their homes, from bread and milk to dinner. This shift to ecommerce will continue to grow across all economic spheres and there is interest from operators in more cash-based environments such as informal settlements to offer a payment solution.

Here, the same economic drivers are in place such as the convenience cost versus that of going to the shop.

This area will speed up when it comes to increasing gains in other payment methods with the integration of PayShap and other digital payment methods being enabled.

6. Instant EFTs

This solution is expected to mature from being a screen-grabbing operation – which banks have warned about as being insecure – to one that is safe and offers convenience. Initially, the success rate wasn’t high but now the consumer experience rate has improved with deeper integration into banks, which reduces the high rate of decline, or the clunky experience.

This method is popular where online transaction values are limited, or people may not be carrying their card when shopping. Merchants may also push this payment system in 2024 because it strips out the cost of card processing fees.

However, it still has a way to go to get to a viable alternative that isn’t frowned upon by the banks and offers customers the assurance that they can, for example, charge back a deal if goods or services are not delivered.

7. Card Scheme Tokenisation

Most online consumers are familiar and comfortable with having their card details stored by their favourite retailer, speeding up future checkouts while negating the need to physically have the card with them at time of purchase.

Visa, Mastercard and the other card schemes have developed their own card tokenisation mechanisms whereby card details will be updated by the schemes as expired, lost or replaced cards are issued.

This means that consumers will never have to recapture card details and online retailers will not have to port their consumers’ card tokens, when changing payment service providers.

8. In store

Retailers are also doing more in shops when it comes to payment devices, such as enabling rewards & loyalty cards that provide information that allows them to operate on an optimised level using enhanced customer knowledge.

They can also use the same point of sale payment devices to assist with stock take, run delivery applications, and enable pay-at-table/order-at-table, allowing retailers to place just-in-time orders, accept deliveries, and send out ecommerce orders using the same set of technology.

Security

Perhaps the biggest trend for 2024 will be not only the need for security enhancements but also consumer education. Between 2022 and 2023, there was a 75% increase in cyber fraud across Africa in all respects.

Consumers will need to know how to identify secure sites or apps through URLs as well as which security standards should be displayed in terms of logos displayed. At the same time, being redirected to banking apps on phones to approve deals adds another layer of security comfort for consumers.

“Ultimately, the right payment solution for any business is the one consumers demand,” says Bosman. He adds that whatever solution is offered, it must be secure because the loss of reputation if a consumer is defrauded is a potential death knell, especially to SMMEs in South Africa.

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