Paystack
Paystack is a Lagos-based fintech company founded in 2015 by Shola Akinlade and Ezra Olubi, specializing in payment processing solutions that enable African businesses to accept online and offline payments from local and international customers via credit cards, debit cards, bank transfers, and mobile money.[1][2] The company rapidly grew to power over 50% of Nigeria's online payments by 2020, serving more than 60,000 clients including major enterprises like MTN, before its acquisition by Stripe in October 2020 for more than $200 million, which facilitated Stripe's entry into the African market while allowing Paystack to expand its infrastructure continent-wide.[3][4][5] Key milestones include becoming the first Nigerian startup accepted into Y Combinator and processing N1 trillion in transactions within a single month in July 2024, underscoring its dominance in Nigeria's digital economy where it supports over 200,000 businesses across sectors like e-commerce, fintech, and global brands targeting African consumers.[6][7][8]Founding and Early Development
Founders and Inception
Paystack was founded in 2015 in Lagos, Nigeria, by Shola Akinlade and Ezra Olubi, two software developers who had been friends since their university days.[9][10] Akinlade serves as the company's CEO, while Olubi holds the position of CTO.[11] The duo, both graduates in computer science from Babcock University, identified persistent challenges in Nigeria's digital payments landscape, including unreliable local gateways and difficulties in processing international transactions for businesses.[9][11] Their inception aimed to build a reliable payment processing platform tailored for African markets, enabling merchants to accept cards and other methods with minimal friction.[10] Prior to Paystack, Akinlade had developed Zap, a system facilitating remittances for foreigners in Nigeria, which informed their understanding of payment infrastructure gaps.[12] Olubi contributed technical expertise from prior software projects. In late 2015, shortly after founding, Paystack became the first Nigerian startup accepted into Y Combinator, the Silicon Valley accelerator program, providing early validation and resources for product development.[9][12] This milestone, announced on November 11, 2015, accelerated their focus on scalable, developer-friendly APIs to integrate payments into e-commerce and subscription services.[12] The company's early operations emphasized security and compliance with local regulations, addressing a market underserved by legacy banking systems.[11]Initial Product Launch and Challenges
Paystack publicly launched its core product—a payment gateway enabling Nigerian businesses to accept online card payments and bank transfers—in January 2016, following a beta phase and acceptance into Y Combinator's Winter 2016 cohort in November 2015.[9] [13] The platform integrated with local banks and processors to facilitate seamless transactions, with early adopters including hundreds of businesses from a pre-launch waitlist.[14] By late 2016, it had processed over 1 billion naira (approximately $3 million at the time) in transactions within its first year of public availability.[13] The launch occurred amid Nigeria's underdeveloped digital payments ecosystem, where online commerce was hindered by low credit card penetration (under 1% of the population held cards) and a heavy reliance on cash or manual bank transfers.[15] Founders Shola Akinlade and Ezra Olubi targeted pain points like protracted foreign payment processing, which often took weeks due to regulatory delays and banking inefficiencies.[16] Key challenges included building trust in a market scarred by fraud and scams, leading to customer skepticism toward digital methods and dominance of cash-on-delivery.[14] [15] Technical hurdles arose from fragmented infrastructure, with frequent card declines and network unreliability necessitating real-time monitoring and rapid error resolution by the engineering team.[14] Regulatory compliance with the Central Bank of Nigeria added complexity, as did competition from informal systems and the need for multi-bank integrations to achieve higher success rates.[15] Despite these, Paystack prioritized reliability, achieving early traction through word-of-mouth among merchants frustrated by existing alternatives.[13]Products and Technology
Core Payment Processing Features
Paystack's payment processing infrastructure allows businesses to accept one-time and recurring payments via integrations with websites, mobile apps, or custom solutions using APIs, JavaScript libraries, SDKs, or hosted payment pages.[17][18] Transactions are initiated by generating a payment link or embedding checkout forms, supporting seamless customer experiences across online and offline channels.[19] The system emphasizes real-time verification and webhooks for event notifications, enabling automated handling of payment statuses without manual intervention.[20] Key supported payment methods include international and local options optimized for African markets, such as debit and credit cards issued by Visa, Mastercard, Verve, and American Express.[21][22] Alternative channels encompass direct bank account debits, bank transfers, USSD codes for feature phone users, mobile money wallets (e.g., M-Pesa in Kenya), QR code scanning, and digital wallets like Apple Pay for supported regions and currencies including NGN, GHS, KES, and USD.[23][24][25] The platform routes transactions dynamically to maximize success rates, reportedly achieving higher conversion than competitors through channel optimization and fraud detection mechanisms integrated into the processing flow.[26] Processing occurs in real-time, with instant confirmations for most methods, reducing settlement delays and supporting immediate fulfillment for merchants.[27] For offline scenarios, the Virtual Terminal feature enables staff to process in-person payments via software interfaces, confirming bank transfers or card details without dedicated hardware, as launched in markets like Nigeria, Ghana, Kenya, and Côte d'Ivoire by June 2024.[28][29] Data retrieval capabilities allow merchants to access comprehensive transaction logs, customer profiles, and settlement reports through dashboards or APIs, facilitating reconciliation and analytics.[6] Recurring billing is handled via subscription plans that automate retries on failed payments and proration for mid-cycle changes, ensuring continuity for services like SaaS or memberships.[18] All processing adheres to PCI DSS compliance for card data security, with additional identity verification tools to mitigate risks in high-volume operations.[30]Recent Product Innovations
In 2024, Paystack launched Zap, its first consumer-facing mobile application designed for instant and secure bank transfers in Nigeria, enabling users to link bank accounts and complete transactions in five steps without delays or pending statuses.[31] This marked a shift toward direct consumer tools, allowing seamless payments via transfers and providing Paystack greater control over fund flows beyond merchant processing.[32] Zap's rollout in March 2025 built on 2024 development efforts to address inefficiencies in traditional bank transfers.[31] Paystack expanded in-person payment capabilities through its Virtual Terminal feature, rolled out to Côte d’Ivoire, Ghana, Kenya, and South Africa in 2023 and further enhanced in 2024, permitting merchants to accept card payments via software without dedicated hardware costs.[28] Complementing this, the company introduced Payouts on Demand in 2023, offering Nigerian businesses instant access to funds—including on weekends and holidays—reducing settlement times from days to immediate availability for eligible international payment recipients.[33] To broaden payment options, Paystack integrated wallet-based methods in Nigeria, including Pay with OPay (accessing over 40 million users), Pocket (over 2 million users), and PalmPay, all added to its Checkout system in 2023 and 2024 for frictionless digital wallet transactions.[34] Internationally, it enabled Apple Pay for online purchases in South Africa and Côte d’Ivoire in 2023, while launching Transfers in Kenya for single or bulk disbursements to banks or M-PESA accounts.[35][36] In October 2025, Paystack introduced bank transfer acceptance for merchants in Ghana, supporting secure transfers of varying sizes.[37] Additional 2025 innovations included a tap-to-pay NFC system for airport access fees in Nigeria, deployed with the Federal Airports Authority of Nigeria (FAAN) in August, using prepaid cards to eliminate cash handling and reduce queues.[38] Paystack also debuted Connect in 2024, a platform for embedding its payment infrastructure into third-party apps to facilitate scalable business integrations.[32] These updates emphasized reliability enhancements, such as multi-factor authentication and fraud prevention tools, alongside data protection certifications in Nigeria, Kenya, and Ghana.[32]Funding and Financial Milestones
Pre-Acquisition Investment Rounds
Paystack's earliest funding came via its acceptance into Y Combinator's Winter 2016 accelerator cohort, where it received $120,000 in pre-seed investment to support initial development.[13] In December 2016, the company closed a seed round of $1.3 million, backed by a combination of international and Nigerian investors, including Tencent, to expand its payment processing capabilities in Nigeria.[39][13][40] The firm then raised $8 million in an August 2018 Series A round led by Stripe, with additional participation from Visa and Tencent, increasing total funding to over $10 million and enabling further product enhancements and market penetration.[39][40]| Round | Date | Amount | Key Investors |
|---|---|---|---|
| Pre-Seed | March 2016 | $120,000 | Y Combinator |
| Seed | December 2016 | $1.3 million | Tencent, various local and international |
| Series A | August 2018 | $8 million | Stripe (lead), Visa, Tencent |