Profitable African fintech PalmPay is in talks to raise as much as $100M

PalmPay, a prominent fintech based in Africa, is currently negotiating to secure between $50 million and $100 million in a Series B funding round, according to sources with knowledge of the discussions. While the specific valuation remains undisclosed, the startup was valued just below unicorn status during its previous funding round in 2021. Although PalmPay has refrained from commenting on the details of the fundraising, a representative stated that the six-year-old company is in a robust financial position and actively seeking growth opportunities. Having raised nearly $140 million in its seed and Series A rounds, PalmPay has now reached profitability, as confirmed by financial insiders. The anticipated investment, expected to comprise both equity and debt, will support PalmPay's efforts to expand its presence in Nigeria, enhance its business-focused services, and introduce its offerings to additional markets in Africa and Asia. Recently, PalmPay announced achieving 15 million daily transactions, bolstered by its 35 million registered users. The annual transaction value has reached “tens of billions of dollars,” according to company statements. Revenue has also seen significant growth, with a reported $64 million in 2023, more than double from previous figures. Founded in 2019, PalmPay began its journey in Nigeria, which boasts the largest population in Africa and serves as a key fintech hub. At inception, a substantial portion of the adult population in Nigeria lacked banking access, with traditional banks primarily serving salaried individuals and formal-sector clients. Recognizing this gap, PalmPay aimed to revolutionize the sector by creating a digital bank specifically tailored for the realities of Africa's informal economy. The platform features instant onboarding, zero transfer fees, and a diverse array of services, including credit, savings, insurance, and bill payments, all designed for underbanked consumers and small businesses. In addition to digital outreach, PalmPay has developed an extensive network of over 1 million small businesses and merchant agents that now assist over 10 million customers monthly via the PalmPay Business app and point-of-sale devices. Competing fintechs in Nigeria, such as OPay, Moniepoint, and Paga, have also adopted similar hybrid models that combine digital applications with physical interactions. PalmPay claims to handle more transactions than any conventional bank in Nigeria, with 25% of its users indicating that it was their first financial account. This figure rises to 60% for users of its credit products, provided in collaboration with licensed lenders. A significant aspect of PalmPay's success is its partnership with Transsion, a leading Chinese smartphone manufacturer, which holds over 40% market share in Africa through brands like Tecno and Infinix. Through this partnership, PalmPay pre-installs its app on select financed smartphones, significantly enhancing user acquisition and engagement. With a solid foothold in Nigeria, PalmPay is now set to replicate its model in international markets. The fintech has already expanded into Tanzania and Bangladesh, its first ventures outside the African continent, where it will introduce device financing and consumer credit before launching additional services. Other African digital banks, such as FairMoney, MNT-Halan, and TymeBank, have also ventured into Asia with varying levels of success. PalmPay also plans to roll out device financing within Nigeria, according to their spokesperson. Although Transsion remains a strategic partner from PalmPay's seed funding, the company is actively seeking collaborations with other original equipment manufacturers (OEMs). Investors in PalmPay include GIC, Singapore’s sovereign wealth fund, and MediaTek, a major player in mobile chipset production. On the business side, PalmPay offers cross-border payment solutions for merchants needing to send and receive payments across Africa through a single API, addressing a common challenge in the sector. This new feature has already begun processing “hundreds of millions of dollars monthly,” as confirmed by a company representative.