Summary:
LemFi acquires UK credit card issuer Pillar to expand financial services for migrants
The deal enables LemFi to introduce a credit card product within its app, complementing its remittance service
Pillar’s technology will now serve a more international market, leveraging LemFi’s large customer base
Remittance flows to low- and middle-income countries rose nearly 6% last year, creating opportunities for migrant-focused fintech
LemFi is developing a credit decision engine that considers migrants' financial history from their home countries
The Scoop
A Nigeria-born remittance provider, LemFi, catering to migrants in the UK, Canada, and Europe, has made a strategic move by acquiring British credit card issuer Pillar. This acquisition aims to leverage the remittances boom and address the financial services needs of immigrants.
Expanding Financial Services
Completed in May, this acquisition allows LemFi to introduce a credit card product within its app, enhancing its money transfer service that has served about 2 million customers since 2021. The company has crossed $1 billion in monthly transactions as of January.
A Mutual Growth Opportunity
For Pillar, this deal means extending its licensed card issuance technology to a more international audience beyond the UK. Since May last year, Pillar had issued approximately 20,000 cards, primarily to migrants from India and Nigeria, and now aims to serve more of the nearly 1 million people moving to the UK annually.
The Bigger Picture
Remittance flows to low- and middle-income countries saw a nearly 6% increase last year, reaching $685 billion, according to the World Bank. This growth is creating business opportunities for migrant innovators, with startup investors eager to tap into this booming market.
Innovative Credit Solutions
LemFi is developing a credit decision engine that considers migrants' financial history from their home countries, offering credit access to those without a UK credit score. This system utilizes Pillar’s technology, which sources data from 18 low- and middle-income countries for credit decision-making.
Financial Inclusion for the Diaspora
Access to financial tools like credit cards is crucial for the African diaspora in developed countries, where less than 5% have access to such services compared to two-thirds of the adult population in the UK. LemFi and Pillar’s fusion aims to streamline services for migrants, avoiding competition and confusion in the market.
Funding and Future Prospects
LemFi raised $53 million in January, led by Highland Europe, while Pillar secured $16.9 million in 2022 from Global Founders Capital, which also backs LemFi. This shared investor base facilitated the acquisition conversation, highlighting the potential for collaborative growth in serving migrant financial needs.
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