Branch International, a digital lending firm, has announced that it has raised $170 million in a series C round led by Visa Inc. and Foundation Capital. Headquartered in the United States, Branch is a financial technology (fintech) company that has more than three million customers – and has disbursed over $250 million in loans – in Nigeria, Kenya, Tanzania, Mexico and India.

Branch International’s existing investors – such as B Capital, Andreessen Horowitz, Formation 8 and Trinity Ventures – were also part of the series C financing. In a statement released on Monday, Branch also announced a new partnership agreement with Visa. The fintech startup explained that the partnership would enable it to supply prepaid virtual debit cards, expanding its cash-out options to ATMs that support Visa. 

Bill Sheedy, Visa’s Executive Vice President of Corporate Strategy, said, “Our partnership with Branch provides Visa with a key distribution mechanism to reach people that were previously out of reach and help shape the future of microfinance.”

Last year, Visa partnered with Branch to offer custom financing to merchants who accept payments via Visa in Kenya. Visa’s General Manager for East Africa, Sunny Walia, explained that the partnership was aimed at offering value beyond transactions. He said, “We would like to help the merchants grow their business and drive financial inclusion among the small merchants’ segment that is often unable to access quick loans.”

Founded in 2015, Branch’s mission is to deliver world-class financial services to the mobile generation. Matt Flannery, Co-founder and CEO of Branch, told Forbes how he came about the idea of Branch. “I spent years travelling to Cambodia or Peru or Nigeria visiting borrowers taking loans from microfinance institutions,” he said. “I knew that these were customers that banks were not really serving.”

Explaining a typical Branch borrower, Flannery said, “They will take a $50 loan, go to the market, by a bunch of stuff, make meals at their restaurant and then two weeks later, they do it again.”

Branch’s loan tenors range from four to 64 weeks. The interest rates range from 14 per cent to 28 per cent, with an equivalent of 1 per cent to 21 per cent as monthly interest. The interest rates are determined by a number of factors, including the customer’s repayment history and the cost of lending for Branch. The fintech firm uses machine learning and smartphone data of customers to assess creditworthiness and give loans, ranging from N1,000 to N200,000.

Speaking on the development, Digital Economy lawyer Adavize Alao applauded Branch’s move to expand in the micro-lending market which has always being ignored by banks. The lawyer added that with this move banks may have to innovate their services or abandon people and organisations that seek cheap loans.

According to Chambers global, Nigerian law firm Udo-Udoma and Belo Osaige advised Branch International “on the regulatory implications of and the obtaining of a licence for the introduction of a mobile lending platform in Nigeria.”

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