BitMama, a cryptocurrency exchange company, is concluding the acquisition of Payday, which would see it taking over the fintech firm backed by Moniepoint.
BitMama, led by Ruth Iselema, who’s serving as the company’s Chief Executive Officer, reportedly offered PayDay investors $1 million worth of equity in the crypto company at a $30 million valuation.
“Favour Ori ( Payday founder) reached out to me because we’re building products beyond crypto; one of those products is Changera, and it made sense to me,” Iselema stated as she confirmed the acquisition.
According to Iselema, while Bitmama started as a crypto exchange, it now focuses on global services, including remittance.
On her part, Ori ‘stated that ”the deal is a work in progress; if the deal goes through, the result will be a strong team with much more efficiency.”
What the acquisition of Payday means
Fintech Telex understands that this development holds significant promise for the potential acquirer. This scenario signifies a departure from the conventional path where an acquirer would typically initiate the establishment of a new venture, such as Changera, Bitmama’s comparatively nascent remittance service, from its inception. Should this acquisition fall through, BitMama stands to benefit from a multitude of advantages that would not be available through a ground-up creation.
Primarily, the most apparent benefit for the potential acquirer lies in the fact that the acquisition obviates the need to embark on the intricate and time-consuming journey of establishing a payment settlement solution like -Changera. Instead, BitMama would gain immediate access to an already operational and functioning remittance service. This circumvents the challenges associated with setting up a new service, including market entry barriers, regulatory hurdles, and the time-consuming process of establishing brand presence and customer trust. By inheriting Payday’s existing infrastructure, the potential acquirer would bypass the initial developmental phase and directly leverage an established platform, potentially accelerating their market entry and competitiveness.
It is noteworthy to mention that the acquisition of BitMama translates to an immediate advantage in terms of technology and software. Creating a new software stack can be a resource-intensive process, demanding considerable time and financial investment. However, through this acquisition, BitMama gains access to Payday’s existing software stack, thereby bypassing the necessity to develop a new one. This not only saves on costs but also expedites the integration process, allowing the acquirer to focus on refining and enhancing the existing technology to align with their strategic objectives.
Another substantial advantage lies in the user base. Securing trust for new users is a challenging and resource-intensive endeavor in today’s competitive market. However, by assimilating Payday, BitMama inherits the payment platform’s established user base. This grants immediate access to a pool of users familiar with the services offered, potentially increasing the acquirer’s market reach and amplifying their customer base without the need for exhaustive user acquisition strategies.
According to an insider close to the deal, if the acquisition materializes, BitMama would assume Payday’s customer deposits and liabilities. This facet further accentuates the advantages for the potential acquirer, as it entails a streamlined transition where BitMama shoulders the responsibility for existing financial commitments, thus alleviating a significant burden for the acquiring entity.
In essence, the potential acquisition of Payday represents an attractive proposition that offers not just an established operational platform, but also an existing user base and technology stack. This strategic move could potentially propel the acquirer ahead in the competitive landscape of remittance services, offering a substantial head start and minimizing the typical challenges associated with launching a new venture from scratch.
About Payday
Payday facilitates cross-border money transfers in 23 currencies, including USD, GBP, and EUR, catering to individuals across 130 countries in both Africa and the diaspora. This service allows remote African workers to receive their earnings in foreign currency and withdraw funds in their preferred currency using virtual Mastercard and Visa cards.
Operating in Rwanda, Nigeria, and recently expanding to the United Kingdom (UK ), Payday swiftly progressed since its establishment, introducing Payday 3.0 in January 2023, just under two years after its inception. This upgraded version transformed Payday into a comprehensive super app, integrating features like local bill payments, virtual naira cards, and payment links.
In February 2023, the payment company forged a partnership with Starlink, a satellite internet service by SpaceX. This collaboration enables Payday to serve as a payment conduit for users in Nigeria and Rwanda, driving the patronage of Starlink services in Africa.
With an impressive average of 40,000 daily transactions amounting to over $25 million, Payday boasts of more than 330,000 individuals.
