Virtual dollar card users in Nigeria were distressed after several fintechs suspended their virtual dollar card service. A virtual dollar card is a virtual card with all the features of a regular credit or debit card. It has all the functionality of a physical card and allows you access to your bank accounts. You can make transactions with a virtual card just the way you use your physical cards.
The virtual dollar card has been helpful to digitally-savvy Nigerians who use it to beat restrictions on international e-commerce as they cannot spend above $20 or $50 a month on their regular cards.
Barter by Flutterwave (Nigeria), Busha (Nigeria), PayDay (Rwanda) and Eversend (Uganda) are issued notices of the suspension of their virtual dollar card services. Via Bater, many other startups using the company’s white-labelled virtual card service for their customers were also affected.
In the statements from the fintechs, they all attributed the suspension to an update from the company’s card partner. It was confusing at first who this card partner was before several media reports linked Zambian startup Union54.
Writer Benjamin Dada in an issue of his newsletter gave a breakdown of how Union54 became a Mastercard Principle member, which allowed them to issue and acquire card transactions. Union54 became a Banking as a Service (BaaS) provider, and with its API, fintechs started issuing debit cards.
Dada had speculated that the high rate of chargeback fraud had caused Union54 to halt its virtual dollar card service and the company, in a memo, confirmed this to its clients, as reported by TechCrunch.
Union54 claims that they have discovered that cardholders were increasingly attempting to defraud merchants by requesting chargebacks after merchants had fulfiled orders. International merchants like Facebook, Google and AliExpress have been contesting these chargeback claims and demanding that the issuing bank (Union54) reverse the chargeback.