Nigerian credit-led FairMoney has acquired PayForce in play banking for retailers

Credit driven Nigerian digital banking platform FairMoney Got PayForce (YC sub-brand supported CrowdForce), a merchant payment services catering to small businesses, as the digital lender looks to expand its financial services offering to merchants.

Both startups declined to disclose the terms of the deal. However, according to sources, the deal was a cash and stock deal in the range of $15 million to $20 million. As part of the deal, CrowdForce CEO Oluwatomi Ayurende He joins FairMoney, where he will lead the company’s Payments business unit: PayForce by FairMoney.

Most African consumers and businesses remain financially disadvantaged – and in Nigeria, where 64 million people live, According to the World Bankwith a shortage of banks, there is a huge opportunity to provide access to financial services to both groups of customers.

While FairMoney has mostly managed banks’ new credit-based game targeting retail clients, CrowdForce, by Pushing force, offers agency banking, a branchless banking model that extends financial services to the last mile via a network of human ATMs. However, several iterations and innovation resulting from competition and increased venture capital have prompted both companies to evolve from their core products to a wide range of offerings while ramping up the retail digital banking and commercial banking space.

PayForce launched to provide merchants with point-of-sale hardware and allow them to offer cash, withdraw, transfer and bill payments to retail customers while providing liquidity via a network of partners (the company told TechCrunch last year that it has the largest liquidity among Nigerian banking network agents, roughly ¥1.7 trillion). The financial technology, which serves more than 10,000 companies, has enhanced its product suite to include business banking, finance team tools, B2B payments and virtual cards. He. She It raised $3.6 million for the pre-Series A last february.

On the other hand, FairMoney started with a digital lending product that covers loans from 15 days to 24 months for mainly retail customers. which company He earned $42 million Series B In 2021, it now provides debit accounts, cards, P2P transfers and payments to more than 1 million retail and small business customers, which has become a big part of its business, CEO Lauren Heaney TechCrunch told via call.

Hainy says the acquisition will provide incentives to merchants who have access to PayForce and who use FairMoney as their primary bank, such as an annual return on deposits of 18%, a rate he claims retail consumers benefit from on the platform. He also said that FairMoney will design specific credit products for different groups of companies, addressing one of the biggest problems facing small businesses in Nigeria: access to loans and working capital. Also, it’s not farfetched to think that FairMoney might look to take on some of the offline clients CrowdForce has served over the years.

“We see ourselves as a retail bank, but the line between merchant and retail is often blurry. We’ve been thinking about the merchant space more and more, and we see a lot of potential synergies between what we’ve built and PayForce independently.” “We know that if we combine both companies, merchants will enjoy what our retail customers already enjoy.”

As consumer digital banking startups like FairMoney and Kuda delve deeper into business banking, fintech companies on the other side of the board, including OPay and Moniepoint, are gaining retail customers. However, the transition has not been smooth for most of these players due to the different banking needs of different customer profiles in one app. Being one of the dominant retail e-banks, FairMoney hopes PayForce – which, according to Hainy, will help small businesses address several weaknesses and allow them to better understand their finances and generate more revenue with its “well-thought-out” product – makes an offer. Value focuses on the much needed merchant and strengthens its position in the business banking space in the country.

“Our view is that PayForce has an advantage because its software is designed for the CFO and small business owner,” Hainy said, giving his thoughts on competition in the acquired company space. “PayForce helps them make more money versus a lot of other competitors, which we think is agency banking because they don’t build a product with the merchant in mind; they build the product with the agent in mind. There’s a big difference, so we’re not worried about the competitive landscape there.”

In fact, through the acquisition, FairMoney wants to gain a larger market share and become the “number one” commercial and retail bank in Nigeria as expressed by Hainy. The fintech intends to add credit cards, remittances, stocks and investment products to its retail customers – and includes payroll, BNPL and online merchant services in its business-facing suite of products.

In addition to building its portfolio, FairMoney is also actively involved in several acquisition talks. The Tiger Global-backed fintech is in talks to raise a $30m+ ​​round from new and existing investors, the money that will go into making these acquisitions (including PayForce) and scaling operations out of Nigeria and across Africa, according to sources familiar with the deal. Heaney declined to comment.

Acquisitions have been on the rise lately in Africa. In this way a reportIn-country acquisitions grew 31% in the second quarter to 52% in the third quarter of 2022, indicating an increasing consolidation trend supported by falling prices and the venture capital crisis. Despite these indications, fundamental exit opportunities can trigger a sell-off in current market conditions as in the case of CrowdForce according to its former chief.

“There are several ways to win. To win, a startup needs a great product, strong execution, marketing and money. Investors often provide the money. This acquisition gives CrowdForce and its investors a combined value proposition to roll out, win and create value for all shareholders. Iorende answered when asked if it should The Abuja based CrowdForce is selling because it has faced a challenging fundraising environment, in a fast paced market like Nigeria, time and speed is critical.

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