Last July, TechCrunch reported that customers of several fintech apps couldn’t access the virtual dollar card services that these platforms provided. In addition, customers couldn’t create new cards, fund existing ones, or make online and in-store payments and purchases with them.
At the heart of this issue was chargeback fraud that Zambian startup Union54 was battling. The YC-backed startup’s API allows companies to issue physical and virtual local and dollar debit cards to their customers and employees without needing a bank or a third-party processor, and it served as the default card partner to 100 fintechs serving the region. Halting its services affected many startups for several weeks before they found alternatives.
The event, more than ever, spotlighted the need for better KYC/AML compliance checks in the card-issuing space (and in fintech in general), as inconsistent due diligence for cardholder chargeback claims could invoke more fraudulent activities.
Union54, which has…
