Safepay, a Karachi-based fintech startup, announced that it has raised a seven-figure seed funding round led by Stripe, the global payments platform, it emerged on Thursday.

Safepay was founded in 2019 by Ziyad Parekh and Raza Naqvi with the aim of increasing the acceptance of online payments. It launched a beta product in 2019 which scaled quickly to reach 300 merchants across the country and became particularly popular among other startups.

However, services were taken offline a year later as the company initiated its next stage which required working within the framework of the State Bank of Pakistan (SBP).

“We feel well-positioned with the right partners backing us to help build on the increasing volume of digital payments as well as work with other Pakistani fintechs to further our vision," Parekh said in a press release.

"In particular, initiatives from the SBP such as Raast will lead to an upward trajectory towards digital payments, to which we want to contribute. We want to see the country’s online economy grow and provide merchants the right tools to achieve this," he added.

Noah Pepper, Stripe’s business lead for the Asia Pacific region, said: “Safepay’s commitment to increasing digital payments in Pakistan will become even more vital as the country continues to pursue a fully digital economy and increases its role in global trade.”

The fintech plans to use the new funds to focus on investing in engineering talent to increase digital payment acceptance in Pakistan beyond credit and debit cards, including mobile wallets and bank accounts.

Other than that, it will be using the money to further develop its products, expand its team, and obtain regulatory compliance, which in this case is the Payments Service Provider licence, the press release said.

Earlier in 2020, the startup graduated from Y-Combinator, the prestigious US-based accelerator, in the summer batch, which also came with $150,000 in funding. It had also raised an undisclosed round from Fatima Gobi, a Pakistan-focused venture capital in partnership with Malaysian Gobi Partners.

With the latest round, the startup is now funded by Global Founders Capital, HOF Capital, Soma Capital, and Mantis Capital, in addition to Fatima Gobi, YC and Stripe.

“The choice of backers reflects a combination of funds that already have links with other businesses in the market and that are bullish on the entrepreneurial space in Pakistan," Naqvi said.

"Backing from Stripe, in particular, will provide Safepay with unique guidance towards becoming a leading technology provider, building world-class products in the context of local payments and commerce,” he noted.