ENTERPRISE54 – Ever since SimplePay pitched on stage in Geneva at the $500,000 SeedStars World startup competition in February the Nigerian internet payment startup has witnessed a rain of investment proposals from local and international moneybags. SimplePay founder Simeon Ononobi while addressing a keen audience of tech entrepreneurs, investors, and media persons, explained he had
ENTERPRISE54 – Ever since SimplePay pitched on stage in Geneva at the $500,000 SeedStars World startup competition in February the Nigerian internet payment startup has witnessed a rain of investment proposals from local and international moneybags.
SimplePay founder Simeon Ononobi while addressing a keen audience of tech entrepreneurs, investors, and media persons, explained he had planned to launch Africa’s ebay off proceeds from his last exit when he realised it costs merchants in Nigeria $3000 to be able to accept online payments from debit cards. And at the time, the free and easy to use third-party payment platform Paypal was unavailable to users in Nigeria, and most of Africa. By January 2013 SimplePay was born.
Simply, the startup is Paypal localised to the Nigerian market and it’s no wonder investors are scurrying to have a piece of the pie. According to Euromonitor, the 171 million people-strong country has a 62.4 million online population, the ninth-largest in the world, with mobile penetration being the major driver. Yet, a July Online Shopping Report by Phillips Consulting revealed Nigeria records a meager $2 million worth of transactions per week and close to N1.3 billion monthly. Factors such as hefty costs for payment gateways and the drudgery and unsafe exposure of personal debit card details on multiple sites have discouraged adoption of online transaction; consequently, leaving an enormous market yet to be conquered. SimplePay on the other hand, solves both problems; a dollar to sign up and users expose card details once to only SimplePay then use personal SimplePay accounts for transactions.
Italian investment and consultancy conglomerate CBO Group were the first to jump on SimplePay’s wagon after Simeon’s pitch in Switzerland.
“We got offers from the likes of CBO Group which we are happy about,” Ononobi tells me. The CBO Group offer was $2 million.
Just then he adds another interesting revelation. “Our biggest offer might be coming from Interswitch or the CEO (Mitchell Elegbe).”
It’s no surprise Nigeria’s leading digital payment giant is trying to get its hand on the future of payment in the market.
It’s like Google acquiring Andriod Inc. It’s like Yahoo acquiring Summly. It’s the way of Corporate giants.
Another local financial powerhouse, UBA Group Chairman Tony Elumelu has made contact with Simeon’s quarters through a third-party though no definite public offer has been made yet. DSTV owner Naspers too doesn’t want to be left out of the party.
“Its what God has done. No man can take the glory,” Ononobi humbly says.
He adds: “We have told them to all hold on as we are getting ready for the Series A round in January. We hope to raise up to $10 million then.”
Simeon Ononobi was confident and not uncertain. The future seems bright for SimplePay with pan-African, Middle East and Europe expansion plans within the next two years. It’s been thought through. Ononobi would be leaving within two years to let “a more competent international CEO” run the company.
“I need to learn more to be able to take the company global,” he explains.
But first, the startup must capture the home market.
Its biggest competitor, the American new entrant, Paypal reportedly registered “thousands” of users on its launch date in June. Simeon is unfazed. He says SimplePay has 10,000 registered users, mostly merchants, and 30,000 unregistered users. Last month, Simeon’s partner Rich Tanksley, flew into Lagos from their Abuja office to hold meetings with Zenith Bank officials. The startup is planning to double down on users and reaching for a million subscribers by January through a partnership with the bank.
“They have 20 million account holders,” Tanksley quips.
“So when about 1,000,000 users keep N5000 in SimplePay account, that’s N5 billion. Whatever bank is nice to us gets to play with all that money.”
Nigerian financial institutions are definitely aware of the encroachment of web and mobile payment technology on their over-the-desk-based transaction business and are readily embracing the trend to survive the future. In not too far away Kenya, banks turned a blind eye to the emergence of mobile money and now pay dearly for it. Between a third and a half of Kenyan GDP now goes through M-Pesa!
Nigeria’s online payment market is still nascent and very much open. What happens if some company begins to crush competition and dominates too much? Rich says: “I’m sure that we and Paga would join forces.”