Palmpay: African Fintech Eyes $100M Funding Round

PalmPay Pursues Series B Funding for Expansion

PalmPay, a digital banking fintech operating in Africa, is reportedly engaged in discussions to secure between $50 million and $100 million in a Series B funding round, as indicated by sources with knowledge of these negotiations.

Valuation and Financial Standing

The targeted valuation remains undisclosed. However, the fintech’s previous funding round in 2021 positioned it as one of the most highly valued startups on the continent, nearing a unicorn valuation.

Although PalmPay refrained from commenting on specific fundraising details, a company representative affirmed that the 6-year-old fintech maintains a robust financial position and is actively evaluating opportunities for growth.

Profitability and Capital Allocation

Individuals familiar with the company’s financial performance have confirmed that PalmPay is currently profitable.

The anticipated new capital, comprising both equity and debt, will be strategically allocated to bolster PalmPay’s expansion initiatives. These include strengthening its presence in Nigeria, broadening its business-focused services, and launching its products in additional markets throughout Africa and Asia.

Transaction Volume and Revenue Growth

PalmPay recently announced achieving 15 million daily transactions, fueled by its 35 million registered users.

The total value of these transactions now amounts to “tens of billions of dollars” annually, according to the company.

Revenue has also experienced substantial growth, with PalmPay’s revenue reaching $64 million in 2023, as reported by the Financial Times, and having more than doubled since then, according to sources close to the company.

Origins and Market Opportunity

Established in 2019, PalmPay initially launched operations in Nigeria, Africa’s most populous nation and a significant fintech hub.

At that time, over half of the adult population in Nigeria lacked access to banking services, and traditional banks primarily served salaried employees or those in the formal sector, often imposing requirements that excluded a large segment of the population.

Innovative Business Model

PalmPay identified an opportunity to disrupt this model by constructing a digital bank from the ground up, specifically designed to address the unique challenges of Africa’s informal economy.

The company introduced an application offering instant onboarding, zero transfer fees, and an expanding range of services – including credit, savings, insurance, and bill payments – all tailored to the needs of unbanked consumers and small businesses.

Hybrid Approach to Customer Acquisition

Importantly, PalmPay did not rely solely on digital marketing for customer acquisition.

The fintech cultivated an extensive network of over 1 million small businesses and agent merchants, who now serve more than 10 million customers each month through the PalmPay Business app and point-of-sale devices for cash-in and cash-out transactions.

This hybrid model, combining digital platforms with physical touchpoints, has also been adopted by other major fintech companies in Nigeria, such as OPay, Moniepoint, and Paga.

Market Penetration and User Statistics

PalmPay asserts that it processes more transactions than any traditional bank in Nigeria.

Furthermore, 25% of its users report that PalmPay provided their first-ever financial account, while this figure rises to 60% among borrowers utilizing credit products offered in partnership with licensed lenders.

Strategic Partnership with Transsion

A key factor contributing to PalmPay’s strong distribution and marketing capabilities is its partnership with Transsion, the Chinese mobile phone manufacturer that holds a dominant market share in Africa, exceeding 40% across its brands (Tecno and Infinix).

Through this collaboration, PalmPay’s application is pre-installed on select financed smartphones, facilitating user acquisition and engagement.

International Expansion Plans

Having established a strong foothold in Nigeria, PalmPay is now preparing to replicate its success in new international markets.

The neobanking platform has expanded to Tanzania and Bangladesh, marking its first venture outside of Africa, where it is initially focusing on device financing and consumer credit before introducing a broader suite of services.

(Other African digital banks, including FairMoney, MNT-Halan, and TymeBank, have also pursued expansion into Asia with varying levels of success.)

Further Initiatives and Investment

The company also intends to launch device financing in Nigeria, as confirmed by a spokesperson.

While Transsion, which spearheaded PalmPay’s seed funding round, remains a strategic partner, the company is actively seeking collaborations with additional original equipment manufacturers (OEMs).

GIC (Singapore’s sovereign wealth fund) and MediaTek, a leading global mobile chipset manufacturer, are among its other investors.

Business-Focused Services

On the business side, PalmPay provides cross-border payment solutions for merchants seeking to send and receive payments across Africa through a single API, addressing a common challenge even with the emergence of stablecoins.

This newly launched business feature, currently operational in Nigeria, Kenya, and Tanzania (with South Africa planned for future rollout), already processes “hundreds of millions of dollars monthly,” according to the company.