A merchant payment service that caters to small companies, PayForce (a sub-brand of YC-backed CrowdForce), has been bought by Nigerian credit-led digital banking network FairMoney.
FairMoney hopes to offer more financial services to retailers through this approach. The deal’s specifics weren’t made public. Yet, the transaction was reportedly a cash and stock sale for between USD 15 million and USD 20 million.
While FairMoney has mostly maintained a credit-led neobanking strategy aimed at retail clients, CrowdForce offers agency banking services through PayForce, a branchless banking model that extends financial services to the last mile through a network of human ATMs. Yet, as the digital retail and merchant banking industry increases, multiple iterations, competition-induced innovation, and attracting venture funding have driven both organisations to grow from their core products to a variety of offers.
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PayForce began by giving POS devices to merchants and enabling them to offer cash-in, cash-out, transfer, and bill payments to retail consumers while supplying liquidity through a network of partners. The fintech has expanded its product range to include business banking, finance team tools, B2B payments, and virtual cards. It currently serves over 10,000 organisations. In February 2022, it raised a USD 3.6 million pre-Series A round.
FairMoney, on the other hand, began with a digital lending product that provides loans to mostly retail clients for periods ranging from 15 days to 24 months. The company, which received a USD 42 million Series B in 2021, currently offers debit accounts and cards, peer-to-peer transfers, and payments to over a million retail clients and small enterprises, which have grown to be a significant part of its business.
PayForce-acquired merchants that utilise FairMoney as their main bank should get incentives from the acquisition, such as an 18% annual return on deposits. In order to address one of the greatest issues small companies in Nigeria face, FairMoney seeks to provide customised credit solutions for all types of enterprises. Furthermore, it is not absurd to believe that FairMoney may attempt to bank some of the offline clients CrowdForce has provided over the years.
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Fintechs on the opposite side of the board, like OPay and Moniepoint, are gaining retail consumers as consumer digital banking firms like FairMoney and Kuda foray into commercial banking. Because multiple client profiles on one app have varied banking demands, the shift hasn’t been easy for most of these players.
FairMoney will be hoping that PayForce, which provides a merchant-focused value proposition that allows small businesses to better understand their finances and generate more revenue through its product, will provide it with a merchant-focused value proposition that will strengthen its position in the country’s business banking space.
Indeed, FairMoney hopes to increase its market share and become Nigeria’s leading retail and merchant bank with the purchase. For its retail consumers, the fintech wants to add credit cards, remittance, stock, and investment products, as well as payroll services, BNPL, and online merchant purchasing to its business-facing product portfolio.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard