Stripe, an American financial services and software company headquartered in California, United States, is acquiring Paystack, an online payment gateway that makes it easy for merchants to accept credit and debit card payments online from users or customers.
Paystack, a startup out of Lagos, currently has about 60,000 customers, including small businesses, larger corporates, fintech, educational institutions and online betting companies.
Earlier this year, Stripe announced that it had picked up another $600 million in funding, for the purpose of expanding its API-based payments services into more geographies.
Sola Akinlade, co-founder and CEO of Paystack said: “Paystack was not for sale when Stripe approached us. For us, it’s about the mission. I’m driven by the mission to accelerate payments on the continent, and I am convinced that Stripe will help us get there faster. It is a very natural move.”
Paystack had been on Stripe’s radar for some time prior to acquiring it. Like its U.S. counterpart, the Nigerian startup went through Y Combinator — that was in 2016, and it was actually the first-ever startup out of Nigeria to get into the world-famous incubator. Then, in 2018, Stripe led an $8million funding round for Paystack, with others participating, including Visa and Tencent.
“A lot of companies have been, let’s say, heavily influenced by Stripe,” Collison said, raising his eyebrows a little. “But with Paystack, clearly they’ve put a lot of original thinking into how to do things better. There are some details of Stripe that we consider mistakes, but we can see that Paystack ‘gets it,’ it’s clear from the site and from the product sensibilities, and that has nothing to do with them being in Africa or African.”
Stripe, with its business firmly in the world of digital transactions, already has a strong line in the detection and prevention of fraud and other financial crimes. It has developed an extensive platform of fraud protection tools, but even with that, incidents can slip through the cracks. Just last month, Stripe was ordered to pay $120,000 in a case in Massachusetts after failing to protect users in a $15 million cryptocurrency scam.
Paystack was launched when Akinlade and Co-founder Ezra Olubi built a quick way of integrating a card transaction into a web page, and it was the simplicity of how it worked that spurred them to figure how to develop the idea into something others could use. That became the germination of the idea that eventually landed them at YC and in the scope of Stripe.
“We’re still very early in the Paystack payments ecosystem, which is super broken,” said Akinlade. The company today provides a payments API, and it makes revenue every time a transaction is made using it. He wouldn’t talk about what else is on Paystack’s radar, but when you consider Stripe’s own product trajectory as a template, there is a wide range of accounting, fraud, card, cash advance and other services to meet business needs that could be built around that to expand the business. “Most of what we will be building in Africa has not been built yet.”
Paystack was reportedly acquired for over $200million.