Nigerian start-up Paystack has grew ten times last year and has handled near US$10 million in monthly transactions



Only 1% of payments in Nigeria is currently online but as businesses begin to make the switch, this percentage will undoubtedly grow in the next 3-5 years. It may only be a small percentage but it’s a small percentage of a very large volume of overall transactions. Russell Southwood spoke to Shola Akinlade, Co-Founder and CEO and Abdulrahman Jogbojogbo, Growth, Paystack about how their payment solution business.

The idea for the business – according to its Co-Founder Shola Akinlade – came out of one of the co-founders working on customer software for a Nigerian bank and realizing that the whole process could be simplified.

So Paystack is a payments gateway that allows businesses across Nigeria to send and accept payments from across the world:” Currently the (payment) channels are limited but they are expanding. Paystack can accept payments in currency. You can put the price in Naira and you can then pay in whatever currency you want”. The exchange rate is the Bank official exchange rate.

9,000 businesses use Paystack including Domino’s Pizza, GIGM and Axa Mansard Insurance. Paystack is being used across all states in Nigeria but the biggest concentration is in Lagos. It has become part of the mobile payments ecosystem in Nigeria enabling businesses that would not have been possible before it (and others like it) launched.

For example, Nigerian start-up Piggybank, an online and mobile app savings platform targeted at African Millennials (which has just raised US$1.1 million in seed funding). It relies on the ability of Paystack to charge customers on a recurring basis. For example, the customer might want to save N50,000 every month. Paystack removes the money and allows Piggybank to hold the saved money and add interest:”It’s a new business that would not be possible without Paystack”.

Businesses who use Paystack do so at the API level, embedding it in their own software. It uses a plug-in with online code:”For example, a large betting business can choose to use the app and customize it as they wish. Some people have their own use cases where they need to adjust how it is used.”

Paystack has had fairly vertical growth since its launch two years ago. At the end of 2017, it had achieved a monthly transactions total of N2.7 billion (US$7.4 million) per month:”We’ve grown ten times every year (since we launched in 2016). The goal by the end of the year is to be doing US$74 million in payments every month. We did N3.5 bn (US$9.6 million) in March 2018”.

Transaction size varies widely seasonally:”There is a lot of betting during the English Premier League season. Betting companies have a large number of bets at N300-500 per transaction. Some businesses are seasonal so you have a high number of transactions over a short period. For example, Farmcrowdy has people who invest N80,000 when farmers are planting their crop.”

The initial change towards online has been slow as it takes longer to change behavior and mindset than it does to change technology:”It’s slow but business owners are realizing how convenient it is. There’s a lot of advertising and incentives. If a person does it 1-3 times, they will do it again. Taxify have encouraged people to pay online and a lot of young people are more open to paying online”.

Jogbojogbo gave the example of quarterly Nigerian music festival Afropolitan Vibes:”They came to our office and said we need people to pay online. Most people are currently paying cash at the concert itself. What we did for them was to actively promote online payment on social media and ask the artists to encourage people to pay before the event. They were also offered discounts if they paid in advance. It got 10 times more payments online than it had previously”.

Apart from seed round from Y Combinator, it had a fundraising round that raised US$1.3 million from Tencent, Comcast Ventures and Singularity Investments, with participation from Spark, M&S Partners, Tokyo Founders Fund, Blue Rinc Capital, Pave Investments, KIBS-CFY Partners, Michael Siebel, Justin Kan, Olumide Soyombo, Leonard Stiegeler and a number of Angels. It will be doing a series A round soon.

Competitors include companies like Interswitch; Vogue Pay ; GT Pay; Simple Pay, PayU, E-Transact and Paga

It is looking to expand to other African countries with plans for a soft launch in Ghana soon. There are also wider roll-out plans across Sub-Saharan Africa (including Kenya) within 18-24 months.

One of the biggest issue holding them back is staff shortages:”With scaling up, we’ll have gaps we’ll need to fill as we grow, particularly in engineering and strategic leadership”. Will it outsource engineering?:”We’re currently 100% in-house and in Nigeria but we might consider outsourcing in the future”.


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