Payaza Africa Limited, a Nigerian payment solution service provider and international money transfer operator, is in the market to raise N20 billion worth of Commercial Paper, however there’s a major risk with its revenue model that investors seem to be overlooking.
Payaza booked N20.16 billion in revenues in the financial year that ended December 2024, up 113%, compared to December 2023, according to data from the financials seen by MoneyCentral.
It was a blowout result no doubt, but looking underneath the hood shows that International collections through a partnership with Mastercard Payment Gateway Solution or MPGS was responsible for 98.6% of Payaza’s revenue, amounting to N19.881 billion.
This MPGS represents revenue derived from fees charged for processing international transactions through the Mastercard payment gateway platform.
At the end of the reporting period, the foreign currency revenue (USD) is translated into the functional currency (Naira) using the applicable exchange rate for the period.
Heavy reliance on international revenue exposes Payaza to currency fluctuations, regulatory complexity and geopolitical uncertainties. Revenue earned in foreign currencies may fluctuate significantly when converted to Nigerian Naira due to exchange rate volatility.
Other domestic sources of revenue were puny by comparison.
Revenue that Payaza derived from fees charged for facilitating fund transfers or withdrawals from merchants’ digital wallets was N227 million in 2024, while revenue from partnership with merchants (local collections) was N54.5 million.
Payaza reported N8.8 billion as other incomes, made up of N4.72 billion in exchange gain and N3.3 billion in fair value gain on landed properties which is likely to be non-recurring in 2025.
The Company transacts in other currencies and is exposed to foreign exchange risk, primarily the US Dollar.
The exchange gain arose from translation of foreign denominated bank balances and revenue transactions (MPGS Revenue) which was impacted due to the increase in the US Dollar exchange rate from N906.25/$1 in January 2024 to N1,549 to US$1 in December 2024 after the unification of all segments of the forex market by the Central Bank of Nigeria.
Another line item under other income which might be a source of concern for investors was N510 million earned by partnering banks for using their platform for processing payments. This was down 54% compared to N1.1 billion earned in 2023.
Payaza’s operating income for the 2024 period of N16.85 billion benefitted from the N8.02 billion in non-recurring exceptional items (exchange gain and fair value gain), without which it would have likely recorded a profit decline from 2023 levels.
Cost of sales for the period also jumped 133% in 2024. Cost of sales relates to the direct cost of transaction processing such as fees charged by partner banks, stamp duty, NIP charges and other fees.
Finance cost was up 221% in the period to N713 million and is set to grow due to the planned N20 billion in Commercial Paper (CP) Issuance, under its ₦50 Billion Commercial Paper Issuance Programme.
The one trick pony revenue trend continued in Half Year (H1), 2025 with MasterCard international collections of N9.97 billion responsible for 97.4% of revenue. Meanwhile an unnamed White Label Project Development earned N3.08 billion in revenue, under other income.
MasterCard Payment Gateway Solution (MPGS) partners like Payaza typically earn fees through commissions based on transaction processing.
For merchant-facing fees on MasterCard transactions, industry examples show gateway fees usually range around 1.5% to 2.5% per transaction. Part of this fee is shared with payment gateway partners, acquirers, and banks.
Payment gateways sometimes pay partners a percentage of these fees or a set commission or margin based on transaction volume processed via the MasterCard gateway.
There is no clear breakdown about the types of international transactions Payaza claims it is processing through the MPGS, however any major macro-economic shock could see reforms unravel and Nigeria re-imposing capital controls, which will lead to a major drop-off in Payaza’s revenue and profit.
The Payaza Commercial Paper is being issued in 2-tranches of N10 billion each with one a 270 days’ tenor and the other a 365 days’ tenor, at an implied yield between 23.5% and 24.5%.
Payaza also has two outstanding N22.95 billion commercial papers maturing on the 9th of February 2026 and 11th of May 2026.
Payaza is owned by four individuals – Seyi Ebenezer (70% stake), Philips Akinyele (15%), Tochukwu Ekwonna (10%), and Tolulope Atomori (5%).
The firm is a payment service provider with a merchant-enabling payment gateway which facilitates transactions for business through various payment methods, including card payments (debit or credit), bulk/single payment, USSD, QR codes, virtual accounts, and mobile money.
The 3-year old company faces intense competition in the fintech payments space from more established competitors such as Flutterwave, Paystack, Remita, Interswitch, and GTPay.
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