PayPal Ventures and Kora Capital lead the $50M fundraising for Egyptian fintech Paymob

Paymob, an Egyptian fintech that allows merchants to accept digital payment online and in-store, has announced today that it has raised $50 Million in Series B funding.

PayPal Ventures, the global corporate venture arm for PayPal, was led by Clay Point, a London-based venture capitalist Clay Point and Kora Capital New York.

Helios Digital Ventures, British International Investment (formerly known as the CDC Group) and Nclude are new participating investors. Nclude is a venture fund that was launched by Global Ventures in collaboration with three Egyptian banks. The $18.5 million Series A investment by existing investors — A15, FMO and Global Ventures — has been doubled.

This round is the largest in Egypt and MENA at this stage. Paymob now has $68.5 million in total funding.

Paymob is a payment platform that works with merchants and businesses of all sizes. Paymob’s omnichannel payment infrastructure allows them accept payments through many methods. CEO Islam Shawky claims that it is the largest Egyptian payment network. There are many options available, including bank cards, mobile wallets and QR payments. You can also pay your bank cards’ installments using BNPL or consumer finance payment options. Paymob offers a POS solution that allows offline merchants to receive card payments in-store.

Shawky, Alain El Hajj, and Mostafa Mesnessy founded the Cairo-based fintech company in 2015. “Our mission is to help merchants grow,” Shawky said. “So we offer merchants, regardless of whether they are an SME or international brand, the ability accept all payment methods. This increases the likelihood and enhances the probability that they will purchase and hopefully grows their revenue.”

Paymob had more than 35,000 merchants use its payment gateways, including Swvl, LG and Breadfast. The merchant count now includes companies such as Vodafone, LG and Virgin, Chalhoub Group and Decathlon. Shawky claims that Paymob will reach a million SMEs within the next few years.

This is a huge forecast, considering Egypt’s 3 million SMEs. Paymob’s strategy for reaching that number is supported by a new partnership with Mastercard: Tap on-Phone contactless payments.

The cost of purchasing a point-of sale machine and the hardware that goes with it can be prohibitive for small and micro merchants. This is a significant barrier to scaling as they will need to process large volumes over a long time to recover the expense.

Tap-on-phone leverages contactless payment technology so merchants can convert their NFC-enabled phones -commercial or personal – into a point-of-sale (POS) by downloading a Paymob app.

The CEO stated that “this is a game-changer for face-to–face transactions because it opens up the market for us and helps our grow tremendously.” Paymob’s product will be available to new merchants and act as an addition to traditional point-of-sale devices. This allows Paymob the ability to keep ahead of PayTabs and Fawry. Flutterwave, Ozow, CinetPay and Ozow are similar companies located in Africa.

Kora Management, a co-lead investor in Paymob, was attracted to the company’s product portfolio. Nitin Saigal is the founder of the company. He says that Paymob “innovates at scale in offline merchant acquiring, and online payment gateway space, as Egypt and Middle East transition from being predominantly cash-led to digital heavy mode, transacting.” The firm also plans to launch cards for B2B transactions and a new checkout platform.

Paymob is not the only fintech in Egypt to have praised the Central Bank of Egypt’s financial inclusion initiatives. Shawky says Paymob’s remarkable growth is due to these initiatives, including the issuance over 20 million Meeza Cards and 25 million wallets as well as the granting of licenses for companies to distribute and operate POS devices.

Paymob reported that its total payments volume was $5 billion in 2020. It is not possible to know what this number looks like at the moment. However, the company shared other metrics that showed its monthly volumes had increased 4x year-on–year by December 2021. According to its website, Paymob had completed more than 120 million transactions by 2020.

Paymob could expand to Pakistan by the end of this year. A statement by the Egyptian fintech stated that it plans to add 100,000 merchants to the South Asian country’s network within the next two-years. This is in addition to the over 4 million SMEs that the country has.

Paymob claims it can serve merchants in more markets than just Kenya and Palestine. However, the company has yet to open a shop in these areas. The company is instead focusing on North Africa and the GCC markets, as the growth financing will provide the necessary firepower to launch there. Paymob plans to expand its market share in Egypt and offer more products in its product line.

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“Paymob shares our ambition to advance digital payments adoption – it has made impressive steps in supporting growth and success for underserved SMBs,” stated Ashish Aggarwal (director at PayPal Ventures), in a statement.

This is PayPal’s first MENA deal and appears to be the CVC company’s second in Africa, after South African open-source finance startup Stitch. Despite a slowdown in global venture capital (but it is not yet reflected in Africa), PayPal’s participation continues the trend of last year, which saw global investors make their first set deals in fintech, which contributed 60% to the total VC funding.

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