South Africa’s major banks are accelerating their push into fintech as competition in digital payments sharpens and customers demand slicker, cheaper services.
Capitec said yesterday that it will spend up to R400m to buy Walletdoc, a move that it says will “bring affordability and accessibility to digital payments”.
The proposed Capitec transaction takes total spending by banks in buying fintech groups this year north of R7bn.
The purchase consideration comprises a cash payment of R300m and a deferred earn-out of R100m, linked to the Capitec share price and payable in cash over three years, subject to certain milestones being achieved.
The acquisition was a strategic step in Capitec’s ongoing commitment to lower payments costs, broaden access to digital financial services and promote financial inclusion in South Africa, the group said yesterday.
Established in 2015, Walletdoc provides scalable, innovative payment gateway solutions for merchants, including online and in-app payments and digital wallets.
Graham Lee, CEO of Capitec, said the transaction fits into the group’s belief in the power of innovative technology to deliver smart, seamless payment solutions that benefit merchants and clients.
“We are committed to making financial services more accessible and affordable for all South Africans, and we see this acquisition as an important step in building a more inclusive and competitive payments ecosystem.
“This is an important step in our journey, and we are excited to develop a world-class payments ecosystem over the next couple of years with our 25-million personal and business banking clients.”
The Capitec deal marks the latest deal in which big banks have snapped up fintech providers.
In August, Nedbank acquired iKhokha, one of Africa’s fastest-growing fintech companies, for R1.65bn.
FirstRand, South Africa’s largest bank by market value, spent about R4.7bn buying a 20% stake in Optasia, an artificial intelligence-driven fintech group that is listed on the JSE.
The JSE- and Nasdaq-listed fintech group Lesaka Technologies in June announced a deal to buy Bank Zero for R1.1bn. The transaction will allow it to launch a suite of foreign currency products to play in the competitive cross-border remittances market.
Once the transaction is complete, Bank Zero chair Michael Jordaan will join Lesaka’s board, while Yatin Narsai will continue as Bank Zero CEO.
Pepkor, which has outlined plans to enter the banking scene, has also recently bought a fintech software company and is on the hunt for other fintech purchases.
The valuation outlook for fintech groups is looking rosy as the SA Reserve Bank ushers in a new era with an imminent overhaul of the payments regime, which will include non-banks entering the clearing and settlement system and fintechs further challenging the hegemony of traditional banks.
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