PayDay, a Rwanda-based neobank, has raised $3 million in a seed funding round led by Moniepoint. TechCabal exclusively reported three weeks ago that Payday was looking to raise $1.5 million in a seed round and today’s announcement disclosed that the round was eventually oversubscribed.
Other investors include Techstars, HoaQ, DFS Lab’s Stellar Africa Fund, Ingressive Capital Fund II, MFS Africa chief; Dare Okoudjou, Norebase CEO; Tola Onayemi, and existing investors; Techstars and Angels Touch. TechCrunch reports that with this raise, PayDay has received a total of $5 million since its inception two years ago.
Payday enables Africans access to global accounts denominated in USD, EUR, and GBP. With the ability to transact in over 20 currencies, Payday’s platform is vital for remote workers and freelancers who need foreign currency transactions. The app is currently only available to customers in Rwanda and Nigeria. In addition to these services, Payday also offers virtual dollar and naira cards for Nigerian users, facilitating purchases on international platforms, currency swaps, payment links, local bill payments, and peer-to-peer transfers.
Competition and a rejected acquisition
PayDay’s features put it in competition with VC-backed B2C fintech apps such as Grey, Lemonade Finance, Send by Flutterwave, and Chipper Cash. The company has ramped up its social media marketing push over the last few months and claims it has tripled its user count to over 300,000 since last year. PayDay admitted to TechCrunch that its marketing spending is eating deep into its pocket but the founder Favour Ori insists that the company remains profitable.
According to Ori, PayDay has been profitable since August 2022 through the fees it charges on transactions and they have quadrupled with its increasing user base. The startup reportedly processes an average of 40,000 transactions daily and over $25 million monthly.
It recently became an official payment partner for SpaceX’s Starlink, enabling users in Nigeria and Rwanda to purchase Starlink routers. It claims to have processed close to $1 million already for Starlink.
Ori also stated that, due to its profitability, the startup has received and turned down a $15 million acquisition offer by an African unicorn.
Payday says it plans to use the raise to ramp up its marketing efforts, secure operational licensing in both the UK and Canada, and increase its staff.