Pesa acquires UK EMI, Authoripay Emoney to begin Europe expansion

Six months later, Pesa (fka Pesapeer) has announced its acquisition of six-year-old Authoripay Emoney Ltd.

Pesa is the trading name of Pesa Inc., a company registered as a Money Service Business in Canada and the US, also incorporated in Australia as Pesapeer Pty Ltd.

Cofounders Tolu Osho, Yusuf Yakubu, and Adewale Afolabi launched Pesa in 2021 to provide remittance services from Canada to Nigeria. This allowed Canadian residents to send Canadian dollars to their beneficiaries, who can then receive local currency (Nigerian Naira). That Canada-Nigeria vision has expanded to include the US, Australia and recently, the UK as originating markets.

According to the company, it “processed over $380 million in transactions in just two years.” Authoripay (now, Pesapeer Payments Limited) will contribute $80 million in annualised transactional volume to Pesa’s platform.

Authoripay Emoney Ltd., incorporated in March 2019, received its EMI from the UK’s Financial Conduct Authority (FCA) two years later, in July 2021. It operated as a financial services provider and regulatory consultancy. According to its website, Authoripay has helped to secure 122 FCA licences for its clients.

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As an EMI, the company can issue e-money and facilitate payment services. This includes activities like providing digital wallets, remitting money, issuing cards, and processing online payments.

As part of the acquisition, Pesa will take ownership of Authoripay’s Principal Membership with Mastercard to issue debit and prepaid cards. “As a Principal Member of Mastercard, Pesapeer Payments enables us (Pesa) to issue and manage Mastercard-branded multi-currency debit and prepaid cards for individuals and businesses,” reads a statement on Pesa’s website.

Why acquisitions like Pesa, Authoripay fuel UK expansion for cross-border fintechs

Like Pesa, LemFi first launched in Canada in October 2020. Condia has previously written about why fintechs often start in Canada. An excerpt from the article titled, Every Nigerian fintech will be a cross-border company, reads:

Canada is a popular starting point for remittance startups because of its readily obtainable and versatile Money Service Business (MSB) licence and not just because of the density of diasporan Nigerians there. With a Canada MSB, Nigerian startups can partner with many licenced players in the cross-border payment value chain, kicking off a global cross-border product.

Also, with a Canada MSB, startups will be able to secure a Nigerian IMTO on the foreign route, which presents a more straightforward pathway to IMTO licensing than the local route. 

However, when LemFi wanted to expand to the UK, it acquired an existing EMI, Rightcard Payment Services Limited. At the time, Rightcard was an eight-year-old company who’d been an EMI for three years (authorised in 2018).

Most fintechs opt to go for an acquisition versus a direct licence application in the UK because of the uncertainty and delays in processing new applications. As of 2019, applications to the FCA could be authorised in four months, according to a former FCA employee and Director at fscom, a regulatory advisory firm, cited by Sifted. In 2021, it started taking about 9-12 months, and now, the timeline is unpredictable.

Venture-backed startups with growth targets and capital can not afford to wait that long. Else, they risk becoming a zombie portfolio company.

Against this backdrop, we see why LemFi’s decision to acquire Pillar, an FCA-licensed credit firm, versus applying directly makes sense.

Speaking to Fintech.ca, Pesa CEO and co-founder, Tolu Osho, says, “This acquisition is a strategic leap forward for us. With these licenses and Mastercard membership, we can now operate with the flexibility and scale of a global financial institution, while continuing to deliver superior remittance and payment products for our users.”