Stripe Acquires Paystack To Expand Its Footprint In Africa
The American online payment company Stripe announced in April 2020 that the company has raised around USD 600 Million in funding to further expand its footprint across the globe. Fast-forward today, it is reported that the company is acquiring Paystack, a payment service company, based in Nigeria.
According to the report published by TechCrunch, Stripe is buying Paystack for around USD 200 Million. If the numbers are true, this is the biggest startup acquisition for Stripe. Paystake has over 60,000 customers which include small and large businesses, corporates, finance companies, educational institutes, and online betting platforms. Stripe said that the afore-mentioned company will be operating independently.
Stripe’s move to expand its global presence is notable as earlier it has never invested in other companies to expand the footprint. The company which is currently valued at USD 36 Billion has added its services in 17 countries in the last 18 months. In absolute numbers, Africa may be smaller right now than other regions, but online commerce will grow by about 30% every year. And even with wider global declines, online shoppers are growing twice as fast. Stripe thinks on a longer time horizon than others because we are an infrastructure company. We are thinking of what the world will look like in 2040-2050.” Patrick Collision, CEO of Stripe said in an interview with TechCrunch.
It’s a massive win for Paystack as the support of a big company like Stripe would accelerate their growth in Africa. Back in 2018, Stripe had led a USD 8 Million funding round for the Paystack which included investors such as Tencent and Visa. Ezra Olubi, CTO of Paystack, said that the company was not for sale when Stripe approached them but their mission to accelerate payments in the continent helped them to make a quicker decision. “We’re still very early in the Paystack payments ecosystem, which is super broken,” he added.
Patrick Collision conveys in an interview that many companies have been “heavily influenced by Stripe”. However, he thinks that with Paystack there’s a lot of original thinking into how to do things better. He adds that “there are some details of Stripe that we consider mistakes, but we can see that Paystack gets it, it’s clear from the site and from product sensibilities, and that has nothing to do with them being in African or African.” Over the years, Stripe has worked extensively to introduce fraud detection tools to eliminate digital transaction crimes.
Paystack was the first Nigerian startup that got the Y Combinator funding of USD 120K which opened its doors to global investors. In 2019, it raised a seed funding of USD 1.8 Million from Comcast Ventures, Tencent, Singularity Investments, and other few investors. Since its inception in 2015, it has raised around USD 10 Million in funding.“The company today provides a payments API, and it makes revenue every time a transaction is made using it,” CEO Shola Akinlade said. “Most of what we will be building in Africa has not been built yet,” he added.