Payday, the innovative bank that offers global payments accounts denominated in USD, EUR and GBP to Africans, has secured $3 million in a seed funding round to bolster its “future of work” initiative. The platform is set to revolutionize borderless payments across major currencies with this new capital injection.
The oversubscribed funding round was spearheaded by Moniepoint Inc., the US-based entity that houses Moniepoint Microfinance Bank and TeamApt Nigeria, and included participation from Techstars, HoaQ, DFS Lab’s Stellar Africa Fund, Ingressive Capital Fund II, and angel investors such as Dare Okoudjou, MFS Africa’s CEO, and Tola Onayemi, CEO of Norebase. Techstars and Angels Touch, Payday’s existing investors, also contributed to the round.
With more than $5 million raised to date, Payday plans to obtain operational licensing in the UK and Canada, expand its team from 35 to 50 employees, and increase its marketing efforts while building out operations in the UK, where the startup has recently been incorporated. The fintech company, based in Kigali and Vancouver, is on a mission to transform the financial industry in Africa and beyond.
Why The Investors Invested
The startup has amassed remarkable traction since its inception. Despite concluding 2022 with a modest tally of just over 100,000 customers, the fintech has since expanded its virtual card selection and product lineup, catering to a whopping 300,000 users. Furthermore, Payday processes an impressive average of 40,000 transactions each day, amounting to a monthly sum exceeding $25 million. Such remarkable figures have even tempted a unicorn corporation from the continent to extend a generous $15 million acquisition offer, only to be declined as per the company’s statement.
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Despite a tripling in the fintech’s burn rate due to a rigorous marketing campaign, CEO Favour Ori assures that the company remains profitable. In fact, the CEO reported that the startup achieved profitability in August 2022. Additionally, the fintech’s monthly revenues have surged fourfold thanks to a rapidly growing user base and the fees charged on transactions.
Notably, the two-year-old fintech has also partnered with SpaceX’s Starlink, allowing users in Nigeria and Rwanda to purchase Starlink routers through their platform. This groundbreaking collaboration has already processed nearly $1 million, solidifying the fintech’s position as a leader in the industry.
“At Moniepoint, we’re excited about the unique things Favour and the team are doing with PayDay. Personally, I connect deeply with his drive, technical depth, and desire to execute. This is something that isn’t very common, and the urge to encourage that fire inspired us to want to be a part of this,” Moniepoint CEO Tosin Eniolorunda said on the investment. “There’s also the alignment in our goal to provide financial happiness by addressing key international payment pain points with merchants and individuals. We see a potential to leverage their infrastructure to further deepen our suite of financial services for merchants as well, and we’re looking forward to all that’s to come.”
A Look At What The Startup Does
In June 2021, Favour Ori launched Payday with the ambitious goal of creating the African version of PayPal. The startup managed to secure a million dollars in pre-seed funding and quickly expanded its reach to 11 African countries, setting up its headquarters in Rwanda, which was known for its business-friendly environment. However, after joining the prestigious Techstars program in Toronto, Payday soon realized that enabling cross-border payments was a costly affair, despite raising an additional $1.2 million in pre-seed extension. As a result, the company was forced to shut down nine of its corridors and narrow its focus to Nigeria. This strategic move paid off, as Payday experienced an exponential surge in transaction volume and user growth, making it a significant player in the Nigerian fintech scene.
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Payday is revolutionizing the way African remote workers and freelancers in Nigeria and Rwanda handle their finances. By allowing them to send and receive money in a range of currencies, including USD, GBP, EUR, and 20 others, Payday is empowering these individuals and those in the diaspora who work remotely for international organizations to be paid and withdraw money in their preferred currency. In addition, Payday offers a suite of innovative features such as virtual dollar and naira cards, currency swaps, payment links, local bill payments, and peer-to-peer transfers. This puts Payday in direct competition with other VC-backed B2C fintech apps serving African customers and the diaspora, like Grey, Lemonade Finance, Send by Flutterwave, and Chipper Cash. In this crowded landscape, each player strives to outdo the others with better speed, fees, or rates, driving constant innovation and improvement.
“We are building TransferWise for Africa; we want our customers to move money faster with the bank accounts and cards we issue. Other platforms focus on Africans in the diaspora; we’re focusing on people in Africa while planning to focus on those abroad by expanding to the U.K.,” Ori told TechCrunch during an interview about Payday’s place in Africa’s remittance and global neobanking space. “We were the first startup to start issuing virtual accounts in Africa around June 2021, and we’ve done this for over 20 months, so we know what works and understand our market and users.”
Payday has ramped up its social media marketing strategy in recent months to expand its market share, and it seems to be yielding positive results.
The startup has bolstered its founding and executive team, which was initially helmed by Ori, who single-handedly ran Payday for 18 months. Joining as co-founder and CPO from global fintech Revolut is Elijah Kingson, while Yvonne Obike, now the COO, holds a co-founder title after her previous experience at Nigeria’s Bank of Industry. Sean Udeke, an accomplished product manager from Goldman Sachs and Expedia, has been appointed as the fintech’s new head of products, where he may oversee the launch of new services such as loans and credit cards.
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“We’re supporting the future of work by targeting remote workers and freelancers, and we want to be able to study customer and spend behaviors and use that to offer loans,” said Ori, who also ran the now-defunct tech outsourcing platform WeJapa. “That’s going to be the future for us. We also want to issue credit cards where if you’re a student trying to go to the U.S., you can start building your credit from Nigeria with Payday.
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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