PalmPay Seeks $100M Funding Round

Multiple people with knowledge of the situation have revealed that PalmPay, an African digital bank fintech, is in negotiations to fund between $50 million and $100 million in a Series B financing.

Although its target worth is unknown, its most recent round in 2021 placed it among the most valuable firms on the continent, coming in just short of unicorn status.

A representative for PalmPay stated that the 6-year-old fintech company is “in a strong financial position and exploring growth opportunities,” but the company declined to comment on the specifics of the fundraising.

People with knowledge of the company’s finances say it is now profitable after raising about $140 million in seed and Series A rounds.

The additional funding, which is anticipated to consist of both loan and stock, will support PalmPay’s growth by expanding its presence in Nigeria, growing its more recent business-oriented product line, and introducing both goods in new African and Asian countries.

PalmPay reported last month that its 35 million registered users were responsible for 15 million daily transactions. The corporation claims that the value of these transactions now totals “tens of billions of dollars” every year.

Revenue has increased as well. According to those with knowledge of PalmPay’s finances, the company’s revenue has more than doubled since 2023, when it was $64 million, as reported by the Financial Times. 

PalmPay was first introduced in Nigeria, the most populous country in Africa and a significant engine for fintech, in 2019. Since traditional banks primarily served salaried or formal-sector clients, frequently with restrictions that barred mass-market users, more than half of the nation’s adults were unbanked at the time.

PalmPay saw a chance to reverse that approach by creating a digital bank from the ground up while tailoring it to the needs of the unorganized sector in Africa. To meet the needs of underbanked people and small companies, the company released an app with rapid onboarding, no transfer fees, and an expanding range of services (such as credit, savings, insurance, and bill payments).

Importantly, PalmPay relied on more than just digital acquisition. Through the PalmPay Business app and point-of-sale devices (for cash-in, cash-out services), the fintech established a massive on-the-ground network of over 1 million small businesses and agent merchants that currently serve over 10 million clients each month.

The hybrid strategy, which combines digital apps with physical touchpoints, has also been adopted by other significant fintech companies in the nation, such as OPay, Moniepoint, and Paga.

According to 25% of its members, PalmPay was their first banking account, and it promises to execute more transactions than any traditional bank in Nigeria. According to the report, that percentage rises to 60% among borrowers for loan products provided in collaboration with authorized lenders.

PalmPay’s relationship with Transsion, the Chinese phone manufacturer that controls the majority of smartphone sales in Africa with a market share of more than 40% across its brands (Tecno and Infinix), contributes to its strong distribution and marketing edge.

As part of the collaboration, PalmPay pre-installs its software on a few financed smartphones, which promotes user engagement and acquisition.

Now that it has become one of the most popular fintech applications in the nation, PalmPay is getting ready to expand its business strategy overseas.

The neobanking platform has made its first appearance outside of Africa in Tanzania and Bangladesh, where PalmPay is introducing consumer credit and device finance as stepping stones before adding more services. (With differing degrees of success, other African digital banks have extended their financial services into Asia, notably TymeBank, MNT-Halan, and FairMoney.)

According to a business representative, the company also intends to launch device financing in Nigeria.

The Fintech firm is aggressively looking into partnerships with additional original equipment manufacturers (OEMs), according to a representative for the firm, even if Transsion, who spearheaded PalmPay’s seed investment, is still a key partner. 

Other investors include MediaTek, one of the biggest producers of mobile chipsets worldwide, and GIC, Singapore’s sovereign wealth fund. 

PalmPay’s newly launched business feature, which is currently available in Nigeria, Kenya, and Tanzania (with South Africa in the works), handles “hundreds of millions of dollars monthly,” according to a company spokesperson. PalmPay facilitates cross-border payments for merchants who wish to send and receive payments across Africa via a single API, a persistent pain point (despite the promise of stablecoins).