Building payments infrastructure for African businesses: Paystack's story

Executive overview

Most of Africa's consumer spending still happens in cash — less than 2% goes through cards. The payments infrastructure that did exist was built for enterprises and loaded with friction: seven steps to complete a transaction, opaque dispute processes, no support for first-time card users.

Paystack reduced that to two steps, built automated dispute resolution, and designed for customers using a card online for the very first time. The result: merchants on the platform grew 30x in 18 months without Paystack changing the core product.

The core insight: payments infrastructure in Africa isn't missing — it's broken by complexity inherited from enterprise banking, and simplifying it unlocks explosive organic growth.

From Dropbox clone to payments

• Shola Akinlade built Pequiro (an on-premise Dropbox alternative) in 2007-2008, reaching 200,000 companies across six languages in five years.
• Moved into building banking software for three Nigerian banks — this gave him direct insight into why payments were broken.
• Spent a year doing underground work on Paystack before launch: built a waitlist of 300 customers and called each one.
• Co-founder Ezra Olubi had previously worked on a payments company; the partnership was a natural fit.
• Paystack became the first Nigerian company accepted into Y Combinator (Winter 2016 batch).
• At YC interview: processed $200 that month. Three years later: $20M+ per month.

Why Africa's payments market is structurally large

• Nigeria's GDP ~$500B, consumer spending ~$150B, population ~200M.
• Under 2% of consumer spending goes through cards; much of that is just ATM withdrawals for cash.
• Most transactions are still offline — but digital is accelerating fast.
• Smartphone adoption increasing, mobile penetration rising, new digital-native business models emerging.
• Example: selling electricity online (Buypower) created a business model that simply couldn't exist with cash — no more waiting until Monday to top up power that ran out Friday night.
• Nigeria's population trajectory: from 45M in 1960 to 200M today, expected to exceed the US within five years.

How Paystack thinks about the product

• Infrastructure was built for enterprises that like complexity; Paystack's first job was to detangle and simplify.
• Two core strategic priorities: make transactions succeed reliably, and make the customer experience good enough that failed payments don't destroy trust in digital payments permanently.
• First company in the market to build automated dispute resolution.
• Philosophy: one bad payment experience = one person who will never trust digital payments again.
• Community strategy alongside product: events (e.g. Facebook partnership teaching merchants to sell on Instagram), tools, and content to help businesses start and scale.

Designing for first-time card users

• Many users completing their first-ever online card payment on Paystack — not just first-time Paystack users.
• Early checkout forms used standard US conventions (CVV, MM/YY expiry) that confused users who entered date of birth instead.
• Solution: build from first principles, treat all affordances as unexplained, add tooltips and visual aids (e.g. diagram of card back).
• Extended payment methods beyond cards to meet users where they are: direct bank account debits, USSD codes (dial a code on your phone tied to your bank account).
• Nigeria has 250+ languages and tribes; product has to be designed for everyone, not just early adopters.

The YC experience and what translated

• Paystack didn't feel out of place at YC — the programme is more international than people assume.
• Key advice that landed: the way to build a strong network is to build something impressive, not to network everywhere.
• Long-term view was clarifying: "It takes about seven years to build a solid startup" — reduced pressure to show results in months.
• Most YC/startup advice translated well; the main difference was psychological: Nigerian founders faced much more "why would you be the one to figure this out?" scepticism.
• YC's alumni network (Bookface) is the most enduring benefit — feels like building a company alongside 1,000 others.

Fundraising and investor dynamics

• Applied for YC Fellowship, didn't get in; applied again for main batch and got in.
• Raised Series A of $8M from Stripe and Visa — deliberately chose investors who have solved the problem of moving payments across markets.
• Sophisticated investors ask the right questions regardless of local context: "Can you build it? Why will you be the one to build it?"
• Advice for African founders: focus on building; the fundraising opportunities come when the business is clearly articulated.
• Fundraising timeline got compressed by events — had planned for September, it happened faster.

Expanding across Africa

• Every market requires local context — Egypt was a sharp reminder: even reading the Uber plate number was impossible (Arabic script).
• Ghana is the nearest and most natural expansion; other markets will be harder.
• The reason international companies don't come to Africa is that local context is genuinely difficult — this is Paystack's defensible moat.
• Chose Stripe and Visa as investors specifically because they've solved cross-market payment scaling.
• Full-stack payments framework: what happens before, during, and after a transaction — this logic holds across markets; only local context changes.

Team building and engineering culture

• Team grew from 5 (two years ago) to 15 (one year ago) to 36 at time of recording.
• CEO's dominant priority has shifted to hiring — a realization that came from being overwhelmed, not from reading advice.
• Challenge: early-stage engineering optimizes for speed, not scale; now hitting the point where millions of DB records require architectural decisions under pressure, with more features still being demanded.
• Looking for senior engineers globally who can upskill local talent — goal is to build the best engineering culture in Africa.
• Vision: every external hire should upskill 20 internal people; compress that knowledge transfer to as short as three months.
• Exploring internal boot camp model to accelerate this.

Gaps and opportunities in Nigerian fintech

• No clear winner yet in any vertical of financial services — opportunity exists across the board.
• Credit scoring: several players but no dominant one.
• Cash-out infrastructure: still underdeveloped.
• P2P payments (a Cash App equivalent) still an open gap.
• Expense management tools for businesses (employee expenses, company spend) still missing foundational infrastructure — though payments layer now exists to build on.
• Logistics layer being figured out (e.g. Max); housing infrastructure developing; payments layer now established.
• The stack for building on top of is now available in a way it wasn't five years ago.

Lessons from building Paystack

• Pick a big problem, but recognize you won't solve it alone — find people better than you at every function.
• Switch from "I do everything" to "hire people better than me" as fast as possible.
• Use the ecosystem: don't try to solve everything internally.
• Mindset shift on psychology: the scepticism African founders face ("how are you competing with a 14-year-old billion-dollar company?") is real, but diminishing as Paystack and peers break barriers.
• No excuses left — once you have money, team, access, and regulatory cover, the only job is to build.