Nigerian business bank Moniepoint and neobank PayDay have denied rumours of a planned acquisition. However, some investors close to the situation say that a deal could still happen in three months’ time.
WeeTracker, an African tech publication, initially reported that Moniepoint was set to acquire PayDay for $40m after leading its $3m seed round. WeeTracker also claimed that the acquisition would assume a valuation of $40m for the neobank.
Nonetheless, both Moniepoint and PayDay representatives have insisted that the investment by Moniepoint was strategic and not an acquisition.
Despite these denials, two sources say a deal is on the table and will likely still go ahead. One source claimed that an agreement in principle had been reached, while another said the acquisition “makes sense” for Moniepoint. According to TechCrunch, PayDay had earlier turned down a $15m acquisition offer from an African unicorn.
PayDay’s potential value to Moniepoint
PayDay is a neobank that connects Africans with the world at large through virtual dollar cards and other similar offerings. It processes an average of 40,000 transactions daily, with a monthly volume of over $25m. These numbers make it a solid option for Africans looking to receive money from abroad.
Moniepoint, on the other hand, is a business bank that has the largest agency banking network in Nigeria. It processed a total annualised payment value of $170bn last year. With Moniepoint on track to achieve unicorn status, acquiring a promising startup like PayDay might help accelerate its journey towards achieving unicorn status.
In addition, the acquisition of PayDay could help Moniepoint to gain a significant market share in the remittance market. PayDay’s customer base and transaction volume suggest that it has cornered a significant share of the remittance market in Nigeria. The acquisition could also allow Moniepoint to expand its offerings and reach more customers in Nigeria and other parts of Africa.
It remains to be seen whether the acquisition will indeed take place. Nonetheless, the rumours have already sparked speculation about the future of neobanks in Nigeria and other parts of Africa. As fintech continues to grow in Africa, more startups and traditional financial institutions are expected to enter the market, driving competition and innovation.
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