Why Gigbanc lost Africa’s cross-border payments race
Despite raising over $1 million and onboarding over 150,000 customers, the fintech is shutting down due to high infrastructure and compliance costs.
Nigerian fintech Gigbanc is shutting down three years after it first launched. Users have until July 31 to withdraw non-fraudulent funds for free. The startup is reportedly in acquisition talks and will hope for a favorable outcome. The startup provided banking and cross-border payment services for freelancers and businesses in Africa.
Gigbanc was founded by Paul Okundaye and Babatope Oni, both of whom came with fintech and consulting experience. Oni previously worked at FairMoney, Traction Apps, and Gokada, while Okundaye worked at Bain & Company and Microsoft.
Okundaye revealed that the decision to shut down operations came down to three reasons: an inability to raise capital, high know-your-customer (KYC) costs, and high infrastructure costs.
When funding dries up
Difficulty raising funding has been the most common reason given by African founders since at least 2023 — ironically the same year Gigbanc launched. The startup raised over a million dollars within the first two years, so it did have some luck on that front.
However, by its own admission, it has struggled to raise follow-on funding since then. There could be several reasons for that, one of which is that investors were unconvinced by its performance.
Cleva, a competitor that launched the same year, has signed up more than 500,000 users in Nigeria alone. Raenest reportedly has over a million users and has processed more than $2 billion in payments. It also serves over 300 businesses, including Moniepoint, Helium Health, and Matta. Another competitor, Grey, reportedly has over 3 million customers across both personal and business banking.
When compared to Gigbanc’s 150,000 users, investors may have wondered if the startup had generated enough momentum to justify additional funding. Gigbanc’s 150,000 customers were primarily within Nigeria, but playing in each of those markets would have come with associated compliance and customer acquisition costs, making it a costly strategy for the fintech.
It’s unclear how long Gigbanc was in the market for funding, but launching in 2023 meant it was coming a bit late to the cross-border payments party. Most of its major competitors launched between 2020 and 2021. Raenest and Cleva are notable exceptions, having launched in 2022 and 2023, respectively.
By the time Gigbanc joined the fray, a lot of customers had gotten familiar with these providers, who were also more resourced. Importantly, only a few of these startups have raised capital since 2024, as stablecoin startups have become the flavor of the moment.
Investor sentiment was not particularly favorable, according to Okundaye. Although the startup had raised some capital in 2023 and 2025, the overwhelming sentiment from investors was that early-stage fintech investments carried significant risk.
“Many investors mentioned that the market for pre-seed fintech in Nigeria was oversaturated, and due to the current global instability and economic slowdown, the general and limited partners found this asset class too risky at the moment,” he told Condia.
That experience aligns with data from Condia’s 2025 funding report. Funding has contracted across the board, leaving many startups in limbo — unable to raise additional capital but also unable to grow quickly enough to attract further investor interest.
Cross-border payments is a game of scale
The 2023 naira devaluation has been one of the more defining moments for Nigerian fintech in the last decade. As the currency lost value and access to foreign currency remained difficult, the appetite for a product that allowed Nigerians to receive and move foreign currency easily grew.
Startups also began exploring additional sources of revenue, and many landed on cross-border payments. Banks had played in this space for decades, but fintechs promised speed, convenience, and lower costs. That was an attractive position for freelancers and remote workers who worked with foreign clients, businesses that made international payments, and families that needed to receive money from abroad.
Customers quickly got onboard; Raenest grew to 80,000 users within three months of its launch and by the time it raised its $11 million Series A three years later, it had more than 700,000 users.
But as more fintechs piled into the space, pricing became the major differentiator, turning cross-border payments and remittances into a race to the bottom. Lower fees could attract users, but it also meant margins were squeezed. Ultimately, only fintechs with a large and active customer base could continue with any hopes of profit.
Infrastructure costs: Where fintechs live or die
Setting up a fintech that helps businesses or individuals receive or send money across continents can quickly become an expensive affair. Startups have to deal with costs ranging from licencing to compliance and the core banking infrastructure that they need to function.
Gigbanc cited high infrastructure and KYC costs as another challenge it grappled with. For the services it provided, it would have needed a lot of infrastructure providers, many of which would charge a fixed fee regardless of whether the startup generated revenue.
Banking-as-a-service (BaaS) providers, for example, would charge an implementation fee, a monthly platform fee, and fees per transaction and account. Fintechs also have to sign up to multi-year contracts with their BaaS. The cost for a BaaS is often subjective and could differ from one provider to the next, but it could range from a few tens of thousands of dollars to over $100,000.
Card issuing is another cost center. Fintechs that offer cards need relationships with card networks and banks. All these relationships or licenses come with onboarding costs, transaction fees, and even minimum costs. Those can be hard for an early-stage fintech with little funding to justify.
Compliance is similar; every new customer is an extra cost. New identities to be verified, more calls to KYC platforms, transaction monitoring for illegal or unusual activity. And all these before the customer generates a dollar in revenue for the fintech.
While a local fintech typically has similar costs, cross-border fintechs need new relationships in jurisdictions they are unfamiliar with or where the compliance costs can be higher than their home country. The result is that scale becomes the only defense for startups, and with little funding backing them, that can get rather tricky.
Gigbanc’s shutdown reflects a reality facing African startups. Cross-border payments remains one of the continent’s more attractive opportunities thanks to remote work and international trade. But it is also intensely competitive.
For startups entering the market today, it shows that building a good product is not enough, and startups must figure out how to drive scale such that the compliance and customer acquisition costs do not drown the business.
