Payday wants to power the future of work for Africa with $3M seed led by Moniepoint Inc

Image credit: Payday

Payday, a neobank that issues global (USD, EUR & GBP) accounts to Africans, has raised $3 million, money the platform intends to use to drive its “future of work” initiative through borderless payment options in major currencies.

The oversubscribed seed investment was led by Moniepoint Inc. (formerly TeamApt Inc), the US entity that houses Moniepoint Microfinance Bank and TeamApt Nigeria. Other investors participated including Techstars, HoaQ, DFS Labs Stellar Africa Fund, Ingressive Capital Fund II and angel investors such as MFS Africa CEO Dare Okoudjou and Norebase CEO Tola Onayemi. Existing investors such as Techstars and Angels Touch followed suit.

When Favor Ori launched Payday in June 2021, the first piece was to build PayPal for Africa, for which it secured a million dollars in pre-funding. Customers in 11 African countries, including Rwanda, where it first established its headquarters due to its business-friendly environment, had access to the platform and could send money to each other. Then the fintech, which became the first Rwandan company to join Techstars (Toronto program), learned that enabling cross-border payments was expensive, despite raising a pre-seed expansion of $1.2 million. As such, it closed nine corridors and focused on Nigeria, where it has since witnessed tremendous transaction volume and user growth.

With Payday, African remote workers and freelancers, especially in Nigeria and Rwanda, can send and receive money in USD, GBP and EUR, as well as 20 other currencies. This means that they and those in the diaspora who work remotely for international organizations can get paid and withdraw money in their currency of choice. Payday also offers virtual dollar and naira cards (allowing Nigerian users to purchase goods and services on foreign platforms), currency swaps, payment links, local bill payments and peer-to-peer transfers. These features are typically provided by other VC-backed B2C fintech apps serving African customers and those in the diaspora, such as Grey, Lemonade Finance, Send by Flutterwave and Chipper Cash, making the landscape a competitive one where each tries to outdo the other speed and better fees or prices.

“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 focus on people in Africa while we plan to focus on those abroad by expanding to the UK,” 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 been doing this for over 20 months, so we know what works and understand the market and our users.”

Payday ramped up its social media marketing in recent months to increase market share, which appears to be paying off. While the fintech ended 2022 with just over 100,000 users, it now offers its virtual cards and other products to more than 300,000 users. Payday also processes an average of 40,000 transactions daily and over $25 million monthly, figures that have exposed the fintech to a $15 million purchase offer from one of the continent’s unicorns, which Ori says was turned down.

Image credit: Payday

Fintech’s burn rate has tripled as a result of extensive marketing. However, Ori claims the company remains profitable (the startup reached profitability in August 2022, according to its CEO), and its monthly revenue, which it earns by charging a fee on transactions, has quadrupled due to its growing user base. Likewise, the two-year-old startup became a payment partner for SpaceX’s Starlink, enabling users in Nigeria and Rwanda to purchase Starlink routers. The company claims to have helped process close to $1 million already.

“At Moniepoint, we are excited about the unique things Favor and the team are doing with PayDay. Personally, I deeply connect with his drive, technical depth and desire to execute. This is something that is not very common and the urge to encourage that fire inspired us to want to be a part of this,” Moniepoint CEO Tosin Eniolorunda said of the acquisition. “It is also the alignment in our goal to provide financial happiness by addressing key international payment issues with merchants and individuals. We see a potential to leverage their infrastructure to deepen our suite of financial services for merchants as well, and we look forward to everything to come.”

Having raised over $5 million since its inception, Payday will now look to secure operational licensing in the UK and Canada while building out its business in the former, where the startup has recently incorporated. The Kigali and Vancouver-based fintech will also intensify its marketing efforts while hiring more talent as it looks to expand from 35 to 50 employees in the coming weeks. It has already made new additions to its founding and leadership team, which originally consisted of Ori, who ran Payday as a solo founder for 18 months. Elijah Kingson joined the company as co-founder and CPO of global fintech Revolut, while Yvonne Obike, the company’s current COO who was previously with Nigeria’s Bank of Industry, now holds a co-founder title. Sean Udeke, an ex-Goldman Sachs and Expedia product manager, is working in fintech as the new product manager, where he can oversee new offerings such as loans and credit cards.

“We’re supporting the future of work by targeting remote workers and freelancers, and we want to be able to study customer and spending behavior and use that to offer loans,” said Ori, who also ran now-defunct tech outsourcing platform WeJapa before resigned following allegations of misconduct. “It’s going to be the future for us. We also want to issue credit cards where if you are a student trying to go to the US, you can start building credit from Nigeria with Payday.”