Why is OPay International acquiring FINJA?

OPay claims it has received SBP approval

KARACHI: OPay International, a Norway based mobile platform that provides payments, transfers, loans, savings, and other essential services, is set to acquire operations of Pakistani fintech company FINJA.

OPay claimed recently that the State Bank of Pakistan (SBP) had given them the nod to acquire FINJA which is only the second fintech in the country to receive a full Electronic Money Institutions (EMI) licence from the central bank.

Profit reached out to Qasif Shahid, CEO and Cofounder of Finja and Ali Mubashir Kazmi, President of Opay Pakistan to verify. Kazmi confirmed that Opay has received SBP approval to acquire Finja.

However Finja neither confirmed, not denied the development. “We have been receiving interest from several financial players in our EMI licence. We can only take proposals seriously after they receive approval from SBP,” said Shahid. 

Why would Opay acquire an EMI licence?

Kazmi told Profit of OPay’s plans to replicate the digital ecosystem in Pakistan that it has created in Africa. “OPay has massively created the digital ecosystem in Africa and plans to do the same in Pakistan. EMI is going to be integral in creating that eco-system for Pakistan for both POS acquiring and wallet/card issuance,” he said. ”I believe there is a huge market opportunity for financial inclusion in Pakistan for which Opay has the financial muscle, commitment  and required team and expertise which other players may be lacking.” 

Besides, obtaining an EMI licence is a lengthy and arduous process. It has also been disclosed that fintech companies typically spend an average of 10 months to progress from in-principle approval to pilot approval, and another 15 months to obtain commercial operation approval. These timelines do not include the time required to secure the initial in-principle approval, which can take several months if not years. 

Long timelines result in high costs for these fintechs. This further explains why Opay is interested in acquiring Finja. By acquiring Finja, not only can OPay secure the commercial licence more swiftly, but it can also initiate the business concurrently. Kazmi commented, “This is true for any business starting from scratch vs. buying a running entity. One always does time value analysis.”

Why would Finja let go of the EMI licence?

The business of EMIs is extremely challenging in Pakistan due to the economic situation, low margins, and cut-throat competition in the local market. For instance, Habibullah Khan told Profit how a major commercial bank Habib Bank Limited (HBL), has been throttling payments to SadaPay placing arbitrary daily limits on transactions. “HBL has set an arbitrary limit of sending 10,000 per day because HBL customers just started putting all their salaries in SadaPay and using it for transactions. How will this work if the SBP cannot protect these EMIs despite issuing the licences?” wondered Habibullah Khan.

Moreover, the majority of EMIs, including those already operating and those yet to launch, are allowed to provide a similar scope of services, resulting in market saturation. The upcoming digital banks and the increasing digital banking services offered by conventional banks will leave little room for this sector to grow effectively. In 2023, two fintech operators withdrew their licence from the central bank. This includes Careem Payment Solutions and Checkout Limited. 

What is Finja?

Finja, founded in 2016, is backed by leading global venture capital firms such as VEF, BeeNext, Quona Capital, ICU, Sturgeon Capital, Gray MacKenzie, and HBL. It was co-founded by Qasif Shahid, Monis Rahman, and Umer Munawar. 

It is Pakistan’s largest dual-licensed fintech – EMI (Electronic-Money Issuer) under regulations of the State Bank of Pakistan and NBFC (Non-Banking Finance Company) from the Securities and Exchange Commission of Pakistan. This made it one of the four operators in the EMI industry providing e-money wallet services to customers and merchants. Finja also initiated a lending business catering primarily to grocery store owners, which continues to operate under the management of its original founders.

It received its commercial operation licence for EMI in 2021. A year later, it raised a $10 Million Series A2 financing round, with participation from notable investors including Sturgeon Capital and HBL.

What is Opay?

OPay, is a one-stop mobile-based platform for payments, transfers, loans, savings, and other essential services for individuals. OPay was founded by Opera Norway AS Group with a footprint in emerging markets across Asia, Africa, and Latin America.

It was recognized by CNBC recently as the “Top 200 Global Financial Technology Companies,” showcasing the names of 200 fintech companies which included those providing electronic payments, digital assets, digital banking, and digital business from around the world. The list includes prominent companies such as Ant Group, Tencent, PayPal, Stripe, Klarna, and Revolut, as well as some emerging startups with great growth potential.  

OPay provides digital payment, digital wallet, and other financial services to emerging market customers in Africa and Asia. In less than five years, OPay has rapidly become one of the most competitive Fintech unicorns in emerging markets which includes countries such as Nigeria, Egypt, and now Pakistan.

OPay is backed by some global VC giants such as SoftBank and Sequoia Capital. The fintech company raised $400 million in funding in 2021.

Profit reached out to SBP to confirm the development, but received no response.

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Mariam Umar Farooq
Mariam Umar Farooqhttp://profit.com.pk
The author is a business journalist and a member of the staff. She can be reached at [email protected]


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