Stripe acquires Paystack for $200m to expand into Africa

American financial services and software company, Stripe, has acquired Nigerian payment processing company Paystack for $200 million. This acquisition heralds the company’s entrance into Africa.

Stripe and Paystack have been working closely together for some time. In 2018, Stripe led a number of other companies including Visa and Tencent in an $8 million in a series A funding, bringing Paystack’s total investment to date to more than $11.3 million before this acquisition. (Paystack raised $1.3 million in 2016)

According to reports, terms of the deal are not being disclosed but sources close to it confirm that it’s over $200 million.

Founded in 2015 by Shola Akinlade and Ezra Olubi, Paystack currently has around 60,000 customers across Nigeria and Ghana. The fintech startup helps businesses in Africa get paid by anyone, anywhere in the world.

Often referred as the Stripe of Africa, Paystack provides a payment interface that allows customers pay with local and international cards, or directly from their bank accounts. It also supports localized payment channels, including mobile money, QR code, and USSD payments.

Shola Akinlade alluded to the fact that Paystack was not for sale when Stripe approached them. “For us, it’s about the mission. I’m driven by the mission to accelerate payments on the continent, and I am convinced that Stripe will help us get there faster. It is a very natural move.”

However one can say that this is a major move for Paystack as “the deal will give the company a lot more fuel (that is, investment) to build out further in Nigeria and expand to other markets, CEO Shola Akinlade said in an interview with Techcrunch.

Stripe was founded in 2010 by Irish entrepreneur brothers John and Patrick Collison. Stripe is a technology company that builds economic infrastructure for the internet. Companies of all sizes – including Amazon, Google, Shopify, and Zoom – use Stripe’s software to accept payments and scale their online businesses. The company provides APIs that web developers can use to integrate payment processing into their websites and mobile applications.

Stripe is currently valued at nearly $36 billion after raising an additional $600 million from backers earlier this year. In May 2020, Stripe expanded its services in 5 new markets in Europe: the Czech Republic, Romania, Bulgaria, Cyprus, and Malta

Patrick Collison said that while acquiring Paystack after investing in it was a big move for the company, people also shouldn’t read too much into it in terms of Stripe’s bigger acquisition policy.

“When we invest in startups we’re not trying to tie them up with complicated strategic investments,” Collison said. “We try to understand the broader ecosystem, and keep our eyes pointed outwards and see where we can help.”

“A lot of companies have been, let’s say, heavily influenced by Stripe,” Collison said, raising his eyebrows a little. “But with Paystack, clearly they’ve put a lot of original thinking into how to do things better. 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 the product sensibilities, and that has nothing to do with them being in Africa or African.”

According to Matt Henderson, Stripe’s business lead in EMEA, “In just five years, Paystack has done what many companies could not achieve in decades. Their tech-first approach, values, and ambition greatly align with our own. This acquisition will give Paystack resources to develop new products, support more businesses and consolidate the hyper-fragmented African payments market. We can’t wait to see what they will build next and how their growth can turbocharge the African tech ecosystem.”

Stripe says that Paystack will continue to operate independently, growing their operations in Africa and adding more international payment methods. This means that there will be no disruption of service as a result of this acquisition. Over time, Paystack’s capabilities will be embedded in Stripe’s Global Payments and Treasury Network (GPTN), a programmable platform for global money movement that currently spans 42 countries.

In 2019, Stripe acquired an Ireland based FinTech startup, Touchtech Payments co-founded by Nigerian Shekinah Adewumi and Niall Hogan