In Nigeria, there are four major fintechs - Moniepoint, Kuda, PalmPay and OPay. OPay distinguishes itself from these other major fintechs through its extensive service offerings and operational model. However, that's not where we're driving toward in this article. You can click the following link to learn more about the advantages OPay over other fintech companies in Nigeria.
In this article, we are going to walk you through the "History of OPAY" in Nigeria. That is to say, we will discuss all the OPay matters from it inception to this present day. Now, without much ado, let's dive into the deal of today.
History of OPAY in Nigeria
OPAY, with full name "OPay Digital Service Limited", was formerly known as Paycom Nigeria Limited and was incepted in 2009 by Telnet Group after the company received a mobile payment license from the Central Bank of Nigeria (CBN).
Paycom's journey began in 2007 when Telnet's leadership secured a meeting with the Central Bank of Nigeria (CBN) as part of an effort to boost financial inclusion in the country. Following a study by Martin Oluba in 2008, which highlighted the need for Nigeria to accelerate the reduction of financial exclusion compared to other nations, the CBN issued mobile payment licenses in 2009.
Founded in 1985 - Telnet, a non-bank and non-telecom organization, was one of the few companies to receive this license. Prior to obtaining the license, Telnet had already been developing the tech architecture for what would become Paycom, a payment service designed to operate on any bank and network. This non-bank-led approach gave Paycom a unique advantage in serving the entire financial system.
The Paycom team, led by experienced professionals like Adewale Adetugbo, Tola Obigbesan, and Folorunsho Aliu, among others, had been with Telnet since its early days and played key roles in pioneering innovations in Nigeria's financial services industry.
One of their notable achievements was developing encrypted USSD transfers, which significantly enhanced transaction security by making it difficult for criminals to intercept and comprehend the information being transferred. This focus on innovation and security helped establish Paycom as a leading player in the Nigerian financial services sector.
In a nutshell, the foundation of Paycom was built on Telnet's earlier efforts to create a tech architecture for a payment service that could operate across any bank and network, positioning it as a versatile player in the financial services industry.
Paycom Acquisition: From Paycom to OPAY
In December 2017, Opera Group entered Africa's payment market by acquiring Paycom. This marked the beginning of Opera's expansion into financial services on the continent. In the same year, the Opera Group introduced OPay in Kenya, probably to test the African mobile money market. In 2018, the Opera Group acquired controlling stake in Paycom Nigeria Limited. The Opera Group was founded by James Zhou Yahui.
After the acquisition, Zhou Yahui relocated the company's headquarter to Ikeja, Lagos State Nigeria and still remain there till date. The name "OPay" is a combination of the prefixes from two entities: Opera and Paycom.
In 2018, OPay received a Mobile Money Operator (MMO) license from the Central Bank of Nigeria (CBN). This license allowed OPay to offer mobile payment services, including the ability to facilitate electronic money transfers, process payments, and offer a range of financial services to users through mobile devices. The MMO license was crucial in enabling OPay to expand its operations and provide a wide array of financial products in Nigeria.
In the same year, OPay's services were also insured by the Nigeria Deposit Insurance Corporation (NDIC). In May 2019, OPay launched its Point of Sale (POS) service, becoming prominent in Nigeria, especially during the naira cash crisis. Olu Akanmu was appointed co-CEO in November 2021, serving until his resignation in 2023.
Opera Group launched OPay in Kenya to test the African mobile money market. OPay expanded to Egypt in 2021, gaining approval from the Central Bank of Egypt to issue prepaid cards. In September 2021, OPay secured international funding led by SoftBank. In May 2022, OPay Nigeria partnered with Verve International to enroll its Verve debit card.
Why Paycom was Acquired
Paycom was acquired by Opera Software for several strategic reasons. Firstly, Opera aimed to establish its mobile payment platform in the Nigerian market, and acquiring a controlling stake in Paycom provided an immediate entry point.
Additionally, Paycom was facing challenges due to a ₦2 billion recapitalization requirement set by the Central Bank of Nigeria (CBN), with a July 1st, 2018 deadline that threatened its future. The acquisition by Opera not only helped secure Paycom's position in the industry but also aligned with Opera's broader strategy to invest $100 million in Africa over two years to deepen internet penetration and strengthen the continent's digital economy, with Telnet, Paycom's parent company, becoming a key local partner in this effort.
OPAY Funding since 2018
Since its rebranding from Paycom to OPay in 2018, the company has attracted significant investment to fuel its growth. In September 2019, OPay raised $50 million in a Series A funding round led by IDG Capital, Sequoia China, and Source Code Capital. This funding was used to enhance operations in Nigeria and expand its commercial network, including its ride-hailing app ORide and food delivery service OFood.
In September 2021, OPay secured $400 million in a Series C funding round led by SoftBank's Vision Fund 2, marking SoftBank's first major investment in Africa. This investment valued OPay at $2 billion and was crucial for scaling its operations across the continent. By August 2022, OPay raised an additional $150 million, further boosting its expansion and technological capabilities.
As of Q4 2023, Opera, an early investor in OPay, valued its 9.44% stake at $269 million, indicating an overall company valuation of around $2.8 billion. However, in Q1 2024, Opera adjusted the valuation of its stake to $253.3 million due to a smaller financing transaction in late 2023, suggesting a revised total valuation of approximately $2.7 billion for OPay.
OPAY Valuation in 2024
As of Q1 2024, OPay's valuation is approximately $2.7 billion. This valuation is based on Opera's adjusted valuation of its 9.44% stake in the company, following a smaller financing transaction that occurred in late 2023.
In conclusion to OPay's History in Nigeria, OPay, originally Paycom, was rebranded in 2018 following its acquisition by Opera Group. This strategic move aimed to expand its services beyond mobile payments to include a broad range of financial services. Lastly, since its inception, OPay has received approximately $650 million in funding and valuation is approximately $2.7 billion as of Q1 2024.
