Problem: upnup founders set out to change the savings mentality in South Africa with a seamless, blockchain-based micro-savings app. But they couldn’t find a way to facilitate recurring bank-to-bank payments and access user spending data with existing solutions.
Stitch solution: upnup partnered with Stitch and integrated LinkPay to enable recurring savings deposits straight from users’ bank accounts, based on their weekly transaction history.
On a mission to cultivate strong savings habits
Savings culture and habits in South Africa pose a significant challenge when it comes to financial health. 35% of adults reportedly skip saving for retirement altogether, and 34% report they don’t have enough savings to last more than a month. The most significant barriers to saving are getting started, and remaining consistent – no matter how small the contributions.
The upnup team set out to solve this problem by developing South Africa’s first automated micro-savings solution, which also enables users to grow their assets by investing funds in bitcoin. The micro-investing concept simplifies and automates the process of putting money away for a rainy day by removing the need for users to manually deposit.
Inside the upnup model
Currently, there are two ways to save with upnup: Roundup or Addup. The Roundup feature works by rounding up to the nearest R5 or R10 each time a customer makes a purchase, and automatically adding the collective remainder from across their transactions into their upnup savings wallet each week. Addup involves contributing a predetermined amount to savings for every transaction in the same way.
Dollar-cost averaging, or the practice of buying consistent amounts of a currency at set intervals irrespective of its price, is not a new concept, but traditionally requires some sort of user action. upnup has taken this popular investing strategy and has simplified it to the extent that its customers can enjoy passive savings with little to no ongoing effort.
Leveraging cryptocurrencies as an investment and savings asset sets upnup apart from exchanges in the market that are often more geared towards trading. Many in the crypto space view bitcoin as a ‘savings currency’ because of its potential wealth-accumulation properties. For example, those familiar with crypto lingo will know the term “hodl”, commonly understood to mean “hold on for dear life”, which speaks to the practice of holding your crypto for the long-term to let it appreciate.
Still, bitcoin-enabled businesses come with their fair share of obstacles. Limitations around marketing and varying consumer perceptions of cryptocurrencies – particularly the notion that you need a lot of money to get involved – pose challenges. upnup’s solution, which automatically purchases bitcoin in small increments on behalf of its users without them having to physically make a deposit every time, works to shift this narrative and make crypto more accessible, harking back to the idea of bitcoin as a long-term asset that will grow in value, and simultaneously resulting in the growth of a micro-investment.
The payments problem
The key to enabling upnup’s seamless and “hands-free” user experience is centered around the ability to automatically move small increments from a user’s bank account to their upnup wallet. upnup’s Head of Strategy and Marketing, Justin Asher, explains, “We realised we had this great idea, but we couldn’t find a way to inject ourselves into the payments process [with existing solutions].”
Fortunately, fellow upnup team member, Ricki Allardice, had recently gone through the process of integrating with Stitch to facilitate bank-to-bank payments for another business. Stitch LinkPay offered the ability to tokenise users’ bank accounts, enabling headless, or variable recurring, payments. The upnup team realised this was exactly what they needed to get the solution off the ground. With Stitch as their payments partner and financial data partner, the team was able to pitch investors, who saw the value in open banking solutions. Asher told us:
“Stitch is our number one way of moving funds between a user’s account into ours, and of calculating their weekly savings contributions. It’s a super integral part of our product.”
upnup customers are able to link their financial accounts to the upnup platform via Stitch, which grants upnup secure, view-only access to the customer’s transaction history, forming a crucial part of the platform’s service offering. Once linked, they can also enable payments from that user’s account to their savings wallet. Existing methods the team explored were either filled with friction or far too costly. Having to navigate card rails or wait for days on manual EFT would severely impact the ease, speed and safety that upnup customers enjoy.
“Stitch is the reason we’re here. We were trying to figure out how to manage, for example, card or EFT, but they were either too expensive or we’d have to wait three days for the money to clear. Plus, the cost associated with card rails and debit orders, not to mention the admin behind it, isn’t viable. Stitch brought our business to life and really made it happen.”
All access to user financial accounts is anonymised and tokenised. This means neither upnup nor Stitch can attribute specific transactions to a user or perform actions on their financial accounts without prior authorisation.
Fulfilling South Africans’ desire to save
Ease of use, security and speed are integral to upnup’s product offering. By leveraging Stitch, upnup has more time to focus on its ambitious goal of cultivating a positive savings culture in a nation where savings are notoriously low. Still recovering from the global pandemic, whilst simultaneously dealing with multiple economically destructive events like loadshedding and rising inflation, the state of South Africans’ savings habits paints a grim picture. However, for many, the desire is there.
Insights from leading data analytics firm, Kantar, revealed that “most South Africans want to save, and they understand the importance of doing so. However, the large majority find it difficult because they find most formal savings offerings overly complex and intimidating, and they simply don’t understand how the typical savings account can help them grow their money.” A belief echoed by Asher, upnup’s mission to demystify savings and make it seamless is clearly needed in the South African market, and beyond.
The upnup team has seen significant interest since launching, with over 10,000 downloads since its beta release in July. There is an extensive product roadmap in their future, with plans to expand on their current offering – from adding other cryptocurrencies to building marketplace features where customers can explore the potential of utility are some of the many ideas in the pipeline.
The team’s ultimate goal is to make investing simple, quick and safe, and to keep shifting the culture of savings in order to create an environment in which people are able to save, no matter their circumstances.
To learn more about how you can leverage recurring payments and seamless withdrawals for your business, get in touch at firstname.lastname@example.org.