South African travel-focused fintech TurnStay.com has secured $300 000 (over R5,4-million) funding from Silicon Valley and New York-based investors: DFS Lab and DCG.
The company plans to use the funding to expand the business into Africa and build on the significant traction already achieved.
Founded by experienced entrepreneurs Alon Stern, co-founder of Slide Financial, and James Hedley, co-founder of Quicket, TurnStay reduces the cost of getting paid for African merchants and platforms in travel and tourism by harnessing the same ‘tricks’ used by the world’s biggest booking companies.
Stephen Deng, general partner at DFS Lab, explains: “TurnStay is building a much-needed offering for the African travel and tourism industry, one that unlocks substantial cost savings for hospitality businesses across the continent. We believe the founders are the perfect team to tackle this opportunity, combining deep industry experience with a proven history of shipping market-leading products.”
Deng adds: “DFS Lab backs founders who use tech to redefine what’s possible in African digital commerce. TurnStay not only fills a critical niche, but we believe what they’re building will raise the bottom line for the African travel and tourism industry.”
Alon Stern, TurnStay CEO, comments: “Securing funding from these US investors is a vote of confidence in our business model, which has already processed more than R50 million in transactions. TurnStay creates a localised payment experience, charging clients in their home currency using familiar payment methods when booking accommodation. TurnStay’s solution has reduced costs for some clients by 70% and halved the number of unnecessary failed transactions. With a better checkout experience, sales conversion rates soar.”
Getting paid can be expensive in the travel industry, as payment fees and fees levied by online travel agencies are added. “The average merchant spends 12% of revenue on getting paid – often, this can be the difference between making a profit or a loss and dramatically affects the viability of many businesses in a sector that employs over six million people in Africa,” says James Hedley, TurnStay co-founder.
An example: A European customer books a South African hotel through Booking.com. The website bills the card in Euros in Europe, where payment processing is much cheaper, resulting in a card fee of around 0,3%. However, if the hotel bills the client’s card using an African payment company, the transaction fees could easily amount to over 7%.
Consequently, payment fees for African hotels can be as much as 20-times higher than those of Booking.com.
Utilising a global network of compliant companies, TurnStay reduces the cost of international payments for hotels without compromising on safety or efficiency and solves the problem that African hotels can pay fees up to 20 times higher than those paid by online travel agencies.
Merchants’ benefits include lower card fees, a better checkout experience, and more direct bookings, which allows properties to compete with online travel agencies with improved conversion rates.
TurnStay’s payment option is embedded and integrates with leading booking engine providers such as Benson Software.