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Kippa Loses ₦30 Million to Internal Fraud and Faces Layoffs

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Kippa Loses ₦30 Million to Internal Fraud and Faces Layoffs

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Kippa, the Nigerian startup specializing in bookkeeping and finance, backed by investors such as Saison Capital and Horizone, encountered a setback as it lost ₦30 million due to internal fraud related to its agency banking product, Kippa Pay.

Sources familiar with the company’s operations informed Techy.ng that the fraudulent activities transpired over a span of four months, but the discovery was only made in November, a month subsequent to the closure of Kippa Pay and the termination of 40 employees. Despite promises made via email regarding severance packages equivalent to one month’s net salary, the company opted not to fulfill this commitment.

The email, seen by Techy.ng, assured employees of additional compensation along with their monthly salary. Kippa has yet to respond to Techy.ng request for comments. The internal fraud was brought to light in November following the shutdown of Kippa Pay, which triggered significant fund withdrawals by customers. During this rush, the company noticed unusual large withdrawals by a customer lacking a Point of Sale (POS) device. This customer turned out to be a senior manager, as reported by three individuals familiar with the matter.

The company subsequently discovered ₦30 million in one of his accounts. While the person’s identity remains undisclosed for legal reasons, he was arrested by the police in November but has since been released. Kippa has been making headlines recently, with Techy.ng reporting exclusively on the shutdown of Kippa Pay.

According to Ekezie-Joseph, the decision to close Kippa Pay was influenced by the devaluation of the Naira, coupled with the challenges faced by the 500,000+ small businesses on its platform. The rapidly evolving market dynamics further complicated Kippa’s quest for product-market fit.

In October, Ekezie-Joseph explained that the focus on profitable merchants in tier-two cities faced challenges due to socioeconomic fluctuations, exposing the segment’s volatility. Kippa Pay was eventually integrated into GPay, a payment subsidiary owned by Bloc, a business bank, in December. The agency banking space, known for its intense competition, proved to be capital-intensive for Kippa. Rising costs, such as the doubling of POS device prices last year, alongside other expenses like technology, customer acquisition, relationship management, and support, created financial pressures.

In response, Kippa attempted to increase prices to ₦35 in light of currency devaluation, but faced with significant backlash from customers and the threat of user churn, the company swiftly reverted to ₦25, as stated by Ekezie-Joseph.

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