Paystack Gets Some Racks: A Breakdown of the Multi-Million Dollar Purchase by Stripe

A lot of good news gets underappreciated when told. And amidst all the goings-on in the diaspora today, most notably the ‘#EndSARS’ protests that have rocked Nigeria, it is possible to have missed out. A valid example of this is the recent $200 million purchase of ‘Paystack’ by their former investor, ‘Stripe’. What is Paystack you ask? It’s only one of the most popular online payment platforms in Nigeria. It was founded in 2015 by the front-end program developer Shola Akinlade and his refreshingly eccentric coding partner Ezra Olubi.

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Left to Right: Shola Akinlade & Ezra Olubi

About 15% of the time you buy stuff on the internet or swipe a card at a POS vendor, Paystack is the one handling it. If you are very observant, you may have seen it once or twice on the checkout page of an online retail store. And, if I’m being honest, up until quite recently I didn’t even know that they were a Nigerian startup (please, don’t ‘at’ me). Join me as I dissect the details of the acquisition of Paystack by Stripe just this week and what that could mean for both companies.

What Does Paystack Have to Gain?

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Stripe is a payment platform that is similar to Paystack in more ways than one. This California-based tech giant’s reach has recently been expanding beyond their horizons. And they continue to buy into more and more diverse newcomers. Paystack is heavily patronised in Nigeria. Everyone from schools to financial institutions makes use of it on a daily basis. And with the dawn of smartphone generation, the demand for online payments has only continued to rise. Therefore, you don’t need a calculator to be able to deduce that “business is booming”.

Although, Paystack has unfortunately not been able to go that far beyond its country of origin. And this may well have been the main reason for their deal with Stripe. In the words of Shola Akinlade, the CEO and co-founder of Paystack “(…) 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.” Moreover, Stripe is known for only showing interest in the best of the best. So, it is safe to say that Paystack is in good hands.

What Does Stripe Have to Gain?

Since its inception, Stripe has been interested in growing as a brand. And with a decade already under this institution’s belt, we can no longer call them young. Usually, when a company gets old, the next feasible move for growth is to move to other geographical regions. Another city, then another state, then countries, and inevitably other continents.

On arriving at the Nigerian market, they obviously met a number of ‘old-comers’. Remita, Paystack and Flutterwave are but a few of the many API driven payment options in Nigeria. So, rather than compete, I’m guessing Stripe just picked the most familiar one of the bunch and joined them. And it must have been a no-brainer seeing as they have had dealings with Paystack in the past. Let alone the fact that the latter commands one-fifth of Nigeria’s total online payment transactions. On why they would pay such a hefty sum just to acquire the rights to a relatively new business, they have replied by saying it’s a long term investment. To quote Patrick Collison, Stripe’s co-founder and CEO, “(…)We are thinking of what the world will look like in 2040-2050.” (That must be one heck of a projection, Patrick).

The Paystack Acquisition Deal : Bought out or Bought into?

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Ezra Olubi

We all know that Paystack was purchased by the well-known online payment service for a whopping $200 million (that’s over N76 billion). This immediately made it the most expensive acquisition ever of a growing company in Nigeria. But were Ezra and Shola really planning on being bought out of the company’s potential? (Potential which honestly far exceeds this unimaginable amount in the long run.) Paystack always seemed to me like one of those tech companies that silently makes waves in the background. But, ironically, it didn’t come as a surprise to me that they were being absorbed by an older peer. Don’t get me wrong, my stance is mostly based on Paystack’s merits, if not entirely. And, being such a popular platform, I wouldn’t think that they had any prior issues with money.

While the exact terms of their agreement weren’t publicised, Paystack continues to function the same. I’ve noticed that the name has not been changed and Paystack still runs on, more or less, all of its initial principles. Both co-founders are also still listed with their original titles. This means that some reasonable agreement had been reached which allows Paystack to still maintain some form of autonomy. The future is not set in stone. Therefore we should expect some natural ‘Stripe-influenced’ changes to Paystack in the future (you don’t just pay that much for something if you won’t have a say, right?). But from all that we know at the moment, it was a good deal for everyone.

What Do You Think?

That’s all you need to know about the acquisition of Paystack by Stripe. What do you think could be the future for this well-known tech startup now that they have ‘merged’ with their North-American counterpart? You can leave your comments in the reserved section below. Are you an aspiring techie or entrepreneur? Maybe both? Then you wouldn’t want to miss out on our new series based on your favourite tech giants and their detailed rise to influence.

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