Analyst View: Stripe Acquires Paystack

Published 15 October 2020
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Analyst View: Stripe Acquires Paystack in $200m USD deal

Stripe, a Silicon Valley backed payments company, announced on 15th October that it was acquiring Nigerian FinTech company Paystack in a deal reportedly worth over $200m USD.

This is fantastic news for the team at Paystack, and the deal, along with other recent tech acquisitions of Beyonic and Direct Payments Online, represents another significant exit within African FinTech.

Stripe and Paystack both provide API-driven payment services, and Stripe has been an investor since co-leading their $10.2 million Series A raise along with payments giant Visa back in 2018.

A perfect match?

Paystack pride themselves on building an all-African team that have a razor sharp focus on execution. Their product is a great example of how to build a business with absolute product market fit, with customers spanning large corporates through to entrepreneurs.

In fact, for the team at Paystack, it is this combination of smart partnerships and business model execution that has enabled them to grow to service 60,000+ customers, whilst only raising around $12 million USD prior to acquisition.

Both Stripe and Paystack graduated from Y Combinator, and the Silicon Valley Unicorn announced in March 2020 that it raised an additional $600 million USD in Series G round intended to be deployed on product development, further global expansion and strategic initiatives.

So perhaps this acquisition is not that much of a surprise, Stripe have been very much commited to global expansion adding a reported 18 geographies through technology acquisitions. However, this deal very much represents a first move into and a commitment to growth in emerging markets. In particular, Nigeria and Africa.

The right time to take the plunge?

In previous reports published by Baobab Insights we have seen significant growth in investment into African e-commerce and last-mile delivery companies. It would seem this trend is in-part fuelled by the enabling technologies and infrastructure provided by companies like Paystack.

The Nigerian Interbank Settlement Services (NIBSS) has also reported continued growth in the use of e-payment services for billing and cashless point-of-sale (POS) devices.

Since Q4 2019, NIBSS has reported that the volume of eBill Transactions has grown from around $200 billion Nigerian Naira to around $350 billion Nigerian Naira. While it is fair to assume that while some of this growth may be driven by the coronavirus (COVID-19) pandemic, it would seem that Stripe and Paystacks partnership is well positioned to capitalise on a growing trend.

Graph showing growth in e-Billing volume and transaction value (Bn NGN)

Source: Nigerian Interbank Settlement System Data

This article was first published in October 2020.