Stax is a consumer-focused fintech app that leverages USSD automation technology to power offline and online payments for individuals and small businesses.

A few weeks ago, I required the services of a hairstylist, we’ll call her Alice for the sake of this article. Alice is a 23-year-old student who does hair styling on the side. While she styled my hair, we got into a conversation that eventually steered into technology and digital banking.

“Do you use your bank’s mobile app for transactions?,” I asked. “I have the app but I prefer using the USSD code for transactions.”

Her answer was surprising. Alice belongs to a demography of African digital natives whose lives have been shaped by digital technology. I had expected that she would prefer the mobile app as it fits more with the narrative of her being a digital native.

But narratives often differ from reality. This is one thing Stax CEO and founder Ben Lyon has come to terms with. “I think the tech industry is quite insular. We consume a lot of our own content and it can keep us out of touch with what everyday people are doing,” he said.

Despite banks and fintech companies favouring mobile bank apps, USSD is still the prevalent protocol used for transactions in most parts of Africa. Since it is used as a catch-all term for many transaction methods unique to different countries, it may be easy to underestimate USSD’s impact. Mobile money transactions like Safaricom’s mPesa, Airtel Money, Orange Money, MTN momo, and mobile banking like GTB’s *737* and UBA mobile banking can all be classified as USSD transactions.

Even among smartphone owners, many favour USSD over mobile app banking. According to GSMA,  9 in 10 transactions still flow through USSD. Caribou Research further confirmed this assertion in a recent survey where they found that among smartphone users, 87% of transactions were done via USSD. Considering that smartphone penetration is around 25-40% for most countries, it is estimated that 94% of transactions are performed via USSD.

However, the prevalence of USSD  has not stopped people from raising eyebrows on what seems to be ancient technology. After all, USSD was created over 20 years ago.

Moreso much has been said about the USSD interface not being friendly for users. Mobile phone apps offer a richer, more interactive experience.

Stax: USSD meets a beautiful user interface

Building on the USSD protocol is something Ben Lyon has been doing for a while now. Hover, the parent company of Stax provides an android software development kit (SDK) for developers to embed USSD into their apps.

Hover’s android SDK allows the service to read and interpret USSD codes and responses. What that means in lay terms is that an app built with Hover’s technology can dial and navigate USSD codes in the background.

Stax was built using Hover’s proprietary technology. “We ultimately made the decision to build Stax ourselves because we built Hover so someone could build something like Stax,” Ben said to Benjamindada.com in an interview.

The mobile app is able to dial and navigate the USSD platforms of financial institutions on behalf of people without them needing to remember or type in long codes. It abstracts the USSD process that does the transaction behind an eye-catching, easy-to-use mobile app.

Since most financial institutions offer their services over USSD for maximum market availability, Stax is able to offer its users access to their accounts with these financial institutions.

Users do not have to create an account - they simply download the app, select the financial institution they already use and link it to Stax directly on the app. Once your bank or mobile money account is connected, you can start transacting.

Interbank transfers, buying airtime, checking transaction history and balances across all your accounts are already available on Stax. According to the team, users should also be able to pay bills in the near future.

These services are also available on regular fintech applications. However, the most important advantage for Stax is that since it is built on USSD, it doesn’t require internet access to function.

In addition, it offers users the flexibility to manage and spend from all their bank, MoMo and fintech accounts from one place.

Since users are not required to create an account, Stax doesn’t collect any data on them. Best of all, it is free on the user end, and the team plans to keep it that way. According to Peace Itimi, Head of Growth at Stax, outside of regular USSD charges, users will not have to pay any extra charge outside of the regular USSD charge.

Building for Africa and Africans

With internet penetration in Africa still below 50%, the ability to function offline makes Stax a critical tool for most smartphone users. Even in African countries with good internet penetration, there are network downtimes and dark spots.

While regular mobile banking users may be financially cut off in those situations, users of Stax will be able to function normally. This means that Stax users can move anywhere without fear of being financially cut-off due to internet connectivity.

Stax plans to open the gates of financial connectivity to people across Africa. “Our mission is to build an inclusive internet. The big idea behind Stax is to blow open the infrastructure that makes financial services accessible to people,” Ben said to Benjamindada.com.

As of launch, the application is available for download in over 10 countries. The company is looking to achieve connectivity in 50 countries by 2022. Using Stax, people can remain financially connected when they travel within Africa.

For instance, if a Nigerian were to travel to a country where mobile money was popular, they could buy a sim card and get enrolled in the mobile money service. Once that is done, they can connect the mobile money account to Stax and now have the app interact with their bank accounts both home and abroad.

For now, the application is only available on Android, which is the most popular operating system on the continent. Over 79% of Africans with smartphones use the Android OS.

Building an ecosystem, not just an app

For the team at Stax, the goal is to be more than just a mobile app. Stax is building an ecosystem that fosters innovation from local entrepreneurs. The company wants to be the first port of call for people looking to integrate offline and online payments.

For starters, Stax is open-source on GitHub and anyone can make a pull request. This model is central to how Ben intends to keep Stax free for its users.

Unlike other “free’ services, Ben is adamant about not turning the users into the product by monetizing their data. Rather, Stax’s revenue model will involve collecting commissions from merchants and sellers who use the product in the future.

“The ecosystem has primarily been dominated by banks and telco incumbents who act as gatekeepers that preclude innovators. We want to change that,” Ben Lyon mentioned during the interview.

As more partnerships are secured, Stax will continue to roll out new features. As long as a service can be codified into USSD, it can be made available through Stax.
“I see Stax as a super app for offline financial payments. We can potentially have every service or feature that is powered by USSD on the app whether it’s crypto payments or bills, ” Peace said about the product’s potential.

The company is also open to entrepreneurs and innovators building on its open-source technology.

Parting thoughts

Conclusively, it is clear to see that the vision for Stax is ambitious. In Ben’s own words, the company’s mission can sound “a little naive.”

However, that doesn’t mean it is not achievable. On closer inspection, it sounds a lot more feasible than hoping to make a dent on financial inclusivity using an internet-powered mobile app or website.

To quote serial entrepreneur and Investor, Victor Asemota “Access is the greatest equalizer...USSD as a simple interface has increased access tremendously [across Africa] because of its low barrier to entry.”

All things considered, Stax’s USSD-driven app may yet be the future of financial transactions in Africa.