Paystack, the Nigerian payments company, announced on Tuesday (Aug. 28) that it raised $8 million in a Series A round.
According to a report in Quartz, citing the company, the round of funding comes less than two years after it landed $1.3 million in seed financing. The round was led by the payments company Stripe, with other participating investors including Visa, Tencent and Y Combinator. Quartz noted that landing Stripe and Visa as investors is huge for the company, as it provides validation of the startup. Some of the proceeds from the round of funding are expected to fund the company’s growth as it aims to expand beyond Nigeria.
Paystack enables developers to create payment tools via its APIs and connects multiple payment processors by handling transactions for merchants and consumers. Quartz noted that Paystack is the latest African FinTech startup to recently raise funds. The report also pointed to Cellulant, a digital payments company operating in 11 countries in Africa, which raised $47.5 million in a Series C round in May.
Despite being home to Africa’s biggest mobile phone market, Nigeria is seeing a decline in banked adults. According to a report in Bloomberg from earlier this summer, financial inclusion in the African country has declined close to 4 percent points from 2014 to 2017, now standing at 39 percent, at the same time that the Sub-Saharan African average of banked people increased more than 8 percentage points to 43 percent.
The government in Nigeria has prevented network operators from applying for mobile money licenses that would enable consumers to make cash transfers without having a bank account. That has led to more people in the country becoming unbanked. As Bloomberg noted earlier in July, the Central Bank of Nigeria said it won’t meet its target to increase financial inclusion to 80 percent by 2020 and is currently reviewing a new path. The bank has inked an agreement with the Nigerian Communications Commission to expand mobile phone-based financial services.