US STRIPE ACQUIRES PAYSTACK FOR OVER $200M TO EXPAND INTO AFRICA
U.S.-based Stripe acquires payments services Paystack for the said sum. This comes after the U.S. startup made it clear that it will use its latest fundraised to expand its API-based services into more regions. However, the acquisition of long referred to as “the African Stripe” was anticipated after the startup pulled $600 million in funding.
Paystack provides a rapid process that enables payments services integration into an online or offline transaction with the aid of an API. The subject startup currently renders its service to about 60,000 customers, which includes small businesses, fintech’s, larger corporate, educational institutions and not excluding online betting companies, while based on the companies’ claim will continue operating independently.
This is quite different from Stripe’s usual approach as it continues to grow, a company that has acquired smaller companies to expand its technology stack but has strategically shifted from that position on a global scale. However, the deal which has been confirmed to be over $200 million is Stripe’s biggest acquisition to date anywhere, but despite this confirmation, the terms of the deal are yet to be disclosed.
Looking at how Stripe is doubling down on global expansion before Stripe acquired the Nigerian based startup, TechCrunch learned it had included 17 more countries to its platform in the last 18 months coupled with progressive feature expansion. Also to note is how it’s investing in the emerging markets of Africa as part of measures of its own growth. Stripe which is currently valued at $36 billion has also been tipped on a regular occasion as an IPO candidate.
Prior to Stripe’s CEO’s response, ‘Shola Akinlade’ who co-founded Paystack with ‘Ezra Olubi’ in an interview made it clear that the deal will help the company with more investment to build out further in Nigeria while expanding to other markets. Adding that:
“Paystack was not for sale when Stripe approached us. 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’s a very natural move”.
In view of this, Stripe’s co-founder and CEO made it clear that “there is an enormous opportunity. 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”.
Looking at its transition, Paystack in 2016 went through Y Combinator – also the first-ever startup in Nigeria to get into the world-famous incubator. While at that time, Stripe led an $8 million funding round for the Nigerian startup, with other participants such as Visa and Tencent. However, prior to Stripe’s latest move, the U.S. company according to reports had made a good number of investments into startups building technology and business, which in this year included backing investment in universal checkout service Fast, also in the same vein for the Philippines-based payment platform PayMongo.
On the other hand, one could wonder why Stripe is acquiring Paystack after investing in it. Stripe’s co-founder Collision made it clear that the acquisition was a big move for the company, adding that people shouldn’t read too much into it in terms of the company’s bigger acquisition policy, however, ‘Patrick Collision’ puts it this way: “When we invest in startups we’re not trying to tie them up with complicated strategic investments. Adding that “we try to understand the broader ecosystem, and keep our eyes pointed outwards and see where we can help”.
It’s also understood the U.S. company isn’t planning to acquire more regional companies in a bid to broaden its footprint. And this is based on the fact that Paystack appears to be well-positioned in offering Stripe’s desired services, to ascertain that, Collision said;
“A lot of companies have been, let’s say, heavily influenced by Stripe. 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”.
It’s evident, Stripe has already made an impact in the world of digital transactions, with a strong line in the detection and prevention of fraud including other financial crimes, so, including Paystack will enhance its global footprint.
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