Credit-driven Nigerian digital banking platform FairMoney has acquired PayForce (YC-backed sub-brand of CrowdForce), a merchant payment service that caters to small businesses, as the digital lender looks to expand its financial services proposition to merchants .
Both startups declined to disclose the terms of the deal. However, according to sources, the transaction was a cash and stock deal in the range of $15 million to $20 million. As part of the deal, CrowdForce CEO Oluwatomi Ayorinde joins FairMoney, where he will lead the company’s payments business unit: PayForce by FairMoney.
The majority of African consumers and businesses remain financially underserved, and in Nigeria, where 64 million people, according to the World Bankare underbanked, there is a huge opportunity to provide access to financial services to both sets of customers.
While FairMoney has predominantly operated a credit-based neobanking game aimed at retail clients, CrowdForce, through pay force, provides agency banking, a branchless banking model that extends financial services to the last mile through a network of human ATMs. However, multiple iterations, innovation induced by competition, and raising venture capital have pushed both companies to evolve from their flagship products to a plethora of offerings as the digital retail and commercial banking space intensifies.
PayForce launched by providing merchants with POS devices and allowing them to offer cash, withdrawal, transfer, and bill payment to retail customers while providing liquidity through a network of partners (the company told TechCrunch last year that it had the most liquidity among Nigerian Agent Banking Networks, almost ₦1.7 trillion). The fintech, which serves more than 10,000 businesses, has enhanced its product suite to include business banking, tools for finance teams, B2B payments, and virtual cards. He raised $3.6 million ahead of Serie A last February.
FairMoney, on the other hand, started with a digital loan product that covers loans from 15 days to 24 months mainly to retail clients. The company, which secured a $42 million Series B in 2021, now offers debit cards and accounts, P2P transfers, and payments to more than a million retail and small business customers, who have become a large part of its business, said the CEO. laurin hainy he told TechCrunch via call.
The acquisition, Hainy says, will provide incentives for merchants acquired by PayForce who use FairMoney as their primary bank, such as an 18% annual return on deposits, a rate he says retail consumers are taking advantage of on the platform. He also said that FairMoney will design specific loan products for different sets of businesses, addressing one of the biggest issues facing small businesses in Nigeria: access to loans and working capital. Also, it’s not unreasonable to think that FairMoney could look to bank some of the offline customers that CrowdForce has served over the years.
“We see ourselves as a retail bank, but the line between merchants and retailers is often blurred. We have been thinking more and more in the retail space and we see a lot of potential synergies between what PayForce and we have built independently,” he added. “We know that if we combine both businesses, their merchants will enjoy what our retail customers already enjoy.”
As digital consumer banking startups like FairMoney and Kuda move into commercial banking, fintechs on the other side of the board, including OPay and Moniepoint, are acquiring 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 neobanks, FairMoney expects PayForce, which Hainy says helps small businesses address various pain points and enables them to better understand their finances and earn more revenue through its “well-thought-out” product. provides you with a much-needed merchant-centric value proposition that bolsters your position in the country’s commercial banking space.
“Our view is that PayForce has an advantage because its software is designed for the finance manager and small business owners,” Hainy said, giving his take on the competition in the acquiree space. “PayForce helps them make more money compared to many other competitors, which we believe are branch bank businesses, because they didn’t create 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, FairMoney, through the acquisition, wants to get more market share and become the “number one” retail and commercial bank in Nigeria, as expressed by Hainy. The fintech intends to add credit card, remittance, equity and investment products for its retail clients, and include payroll, BNPL and online merchant acquisition services in its suite of business-oriented products.
In addition to developing its stack, FairMoney is also actively involved in various acquisition talks. The Tiger Global-backed fintech is in talks to raise a bridge round of more than $30 million from new and existing investors, money that will go towards making these acquisitions (including those of PayForce) and scaling operations out of Nigeria and across Africa. , according to sources familiar with the deal. . Hainy declined to comment.
Acquisitions have been on the rise in Africa of late. According to this report, domestic acquisitions grew from 31% in the second quarter to 52% in the third quarter of 2022, indicating an increasing consolidation trend fueled by falling prices and a VC crisis. Despite these indicators, basic exit opportunities could trigger a sell off in current market conditions, as was the case with CrowdForce according to its former boss.
“There are multiple ways to win. To win, a startup needs a great product, strong execution, marketing, and funding. Investors mostly provide funds. This acquisition provides CrowdForce and its investors with a combined value proposition to start execution, win and create value for all shareholders. In a fast-paced market like Nigeria, time and speed are of the essence,” Ayorinde replied when asked if Abuja-based CrowdForce had to sell because it encountered a challenging fundraising environment.
