Pan-African digital payments company MFS Africa is acquiring U.S.-based Global Technology Partners (GTP) in a cash-and-shares deal worth $34 million, FT reported today.
There are very few deals of such manner; that is, an African tech company buying up a U.S.-based one. While it can be seen as bragging rights for some, MFS Africa made the deal out of a necessity for its next growth phase.
MFS Africa’s infrastructure merges fragmented and disparate payment schemes across Africa into one seamless network so individuals and businesses within mobile money ecosystems can transact across borders and currencies. The Africa-focused and London-based company connects more than 320 million mobile money wallets across 35+ African countries and 700 corridors.
But despite these connections across borders, millions of Africans can’t still use their mobile money accounts to pay for subscription-based services run by international companies such as Netflix and Amazon.
GTP is a developer of prepaid and mobile payment software. According to PitchBook, its prepaid and mobile payment platform integrates several prepaid cards with a single bank account and allows users to make prepaid payments for online shopping and ATMs. Per FT’s report, the acquisition gives MFS Africa an avenue to issue prepaid cards to its customers so they can perform these tasks.
“It’s mostly for international e-commerce platforms, which are not able or willing to create the user experience that will accept mobile,” MFS Africa CEO Dare Okoudjou said. He also mentioned that MFS had struck a deal with Spotify to allow the music subscription company to accept mobile payments from customers in Kenya, Uganda and South Africa.
More than 500,000 clients in over 30 countries use GTP prepaid cards. With MFS Africa’s merger, the total clientele reach could reach several millions, Okoudjou said. The acquisition also helps MFS to “expand its activities in the U.S.,” he added.
Unlike other African fintechs that enter new markets on their own, MFS is known for its acquisition-led expansions. The fintech, which raised $100 million in equity and debt, has made several of these moves in its bid to become a true pan-African player -- such as its acquisition of Baxi, an agent banking platform -- but buying GTS is its first purchase beyond the continent. Other African fintechs such as Chipper Cash and Flutterwave have explored expansion into the U.S.
The GTP deal is a second win for the mobile money ecosystem -- regarding online payments --within days. Last week, Visa partnered with Safaricom, the M-Pesa mobile money operator, to launch virtual cards for M-Pesa’s 30 million users to make digital payments globally. Users can activate the virtual card through the M-Pesa mobile app or USSD. Previously, M-Pesa users could only make mobile money payments within the platform’s network of 400,000 merchants.