Why crypto company Bitmama acquired fintech startup Payday

Cryptocurrency company Bitmama has acquired Payday, the fintech startup that allows Africans to receive payments via its virtual euro, pound and United States dollar bank accounts.

Fast facts

• Earlier reports suggested that the deal was nearly done.
• However, a Bitmama representative told Mariblock that the “deal is done,” adding that the company has hired some of Payday’s employees.
• The representative said:

“At the crux of it, we’re acquiring the customers [and] the backend operations. Also, we have already hired some team members of Payday; we spent the two weeks having back-to-back interviews with certain members of Payday, and I can boldly say we have absorbed some members of the company [Payday] into our team.”

• Payday also confirmed the acquisition to its users in an email seen by Mariblock.
• Neither Bitmama nor Payday disclosed the terms of the deal.
• However, Technology news outlet Techcabal reported that Bitmama is offering Payday investors $1 million in equity. It’s unclear if the acquisition is entirely equity-based or if, perhaps, there’s cash payment involved.
• When asked, the Bitmama representative declined to comment on the terms of the deal. However, they did mention that Payday will continue to operate independently “for now.”
• This development follows a Techcabal report in September that Payday was “actively speaking to buyers” six months after raising $3 million in a seed funding round.
• The deal is being done via Bitmama’s remittance service, Changera, with Payday’s customers, deposits and liabilities being inherited.

Key quotes

• Bitmama CEO Ruth Iselema said in a joint press release from both companies shared with Mariblock:

“This acquisition is an exciting opportunity for Bitmama Inc. through its product Changera to further solidify our position as a leader in the financial technology space while providing added value to our current and future customers actively seeking cross-border payment solutions.”

• Payday CEO Favour Ori said in the same release:

“We believe that joining forces with Bitmama Inc. will allow Payday to leapfrog the next innovative features to customers, satisfy current customers better, and overall, offer an even more comprehensive suite of digital payment solutions, reinforcing our commitment to making financial transactions seamless for our users.

Why has Bitmama acquired Payday

• On the surface, Changera and Payday appear to compete for the same audience type with overlapping services. Changera offers virtual bank accounts and debit cards — and so does Payday.
• Bitmama’s representative dismissed the idea that the two companies provided similar services, saying:

“[We] do not offer overlapping services; rather, Changera has a broader scope of offerings than Payday. For instance, we have the [business-to-business] B2B and [business-to-customer] B2C components for Changera. The [unique selling point] USP of Payday is tied to [its] virtual [debit card], which is also a welcome proposition.”

• The Bitmama representative’s response provides a clue as to why the crypto company found Payday attractive. One word: customers.

“This acquisition has birthed a symbiotic relationship. We will be able to serve Payday’s customer base and extend our offerings [such as foreign exchange transfer]to them.”

• Payday claims to have over 700,000 users on its website.
• Bitmama is currently working on a rebrand, the crypto company said.

Zoom out

• Although it launched in 2017 as a peer-to-peer cryptocurrency exchange, Bitmama has always had remittances in its sights.
• After years of running primarily as a crypto exchange, the company floated a fintech arm in 2021. In the backend, the fintech, Changera, leverages the Bitmama crypto infrastructure to offer cross-border payment services.
• This way, the company’s users are able to benefit from crypto’s superior efficiency in a familiar interface.
• In July, Changera integrated MoneyGram Access, a solution that powers stablecoin-based remittances. Following the integration, Changera started offering cash-in and cash-out remittance services in Canada, Senegal, Uganda and Kenya.
• Last year, Bitmama announced $2 million in venture funding from investors, including Unicorn Growth Capital and Launch Africa.
• In July, Mercy Corps Ventures, the impact investing arm of the eponymously named non-profit Mercy Corps, announced its investment in Bitmama.