For Nasdaq-listed payments processor dLocal (DLO), the third quarter of 2025 presented a stark dichotomy in its African operations. While the company faces a sharp contraction in Egypt — once its crown jewel in the region — a surge in volume from Nigeria, led by a deepening partnership with Y Combinator-backed fintech Grey, has emerged as a vital counterweight.

The latest financial reports reveal a region in transition. dLocal is currently navigating a “tale of two Africas”: a legacy business in Egypt being eroded by client internalization and macroeconomic shock, and a burgeoning “Other Africa” segment driven by cross-border payouts and high-growth fintech partnerships.

The “Other Africa” Boom

While headline numbers for the Africa & Asia region appeared sluggish — revenue dropped 10% quarter-over-quarter (QoQ) to $48.2 million — these figures obscure a massive underlying shift. The segment dLocal categorizes as “Other Africa & Asia” (excluding Egypt) saw revenue explode by 83% year-over-year (YoY) to $40.2 million.

One of the primary engines of this growth is the Nigerian fintech Grey (formerly Aboki Africa).

According to dLocal’s Q3 data, the partnership with Grey facilitated an 80% quarterly growth in payouts across Africa. This metric is significant. It refers to the Total Payment Volume (TPV) of funds moving from global entities to local recipients — freelancers, remote workers, and businesses — in local currencies like the Nigerian Naira (NGN) or Kenyan Shilling (KES).

Decoding the Growth

The surge is not accidental. It is the result of dLocal’s “land and expand” strategy working as intended. Grey, which recently crossed the 2 million user mark, utilizes dLocal’s rails to manage the complex regulatory and banking infrastructure required to terminate payments in fragmented African markets.

As Grey expands — recently launching local currency payouts in Morocco and India — dLocal captures the transaction fees on every dollar moved. This validates dLocal’s pivot toward being an infrastructure layer for other high-growth fintechs, rather than solely relying on direct merchant acquisition.

If Nigeria represents the future for dLocal, Egypt currently represents a cautionary tale of emerging market volatility.

Just a year ago, Egypt accounted for 10% of dLocal’s total global revenue. In 3Q25, that share collapsed to just 3%. Egyptian revenue fell to $8.1 million, down significantly from $18.6 million in the same period last year.

What Went Wrong?

The report attributes this decline to two specific headwinds:

1. “Redundancy Adoption” (Client Internalization): Management disclosed that a “large merchant” in Egypt shifted volume away from dLocal to its own internal payment systems. This “share-of-wallet loss” highlights a perennial risk for payment processors: as clients grow massive, they often build their own tech to save on fees.
2. Macroeconomic Pressure: Following the currency devaluation earlier in 2024, foreign exchange spreads have compressed, reducing the margins dLocal can extract from cross-border transactions.

While dLocal management noted that “some volume recovery began in October,” the Q3 figures show the full impact of this strategic loss. The Egyptian market, dominated by complex local payment methods like Fawry and heavy reliance on cash-on-delivery, remains structurally attractive but currently volatile for external processors.

The Aza Finance Complication

Beyond the operational numbers, dLocal’s African strategy has faced a significant corporate hurdle regarding inorganic growth.

In June 2025, dLocal announced an ambitious intent to acquire Aza Finance, a non-bank financial institution specializing in cross-border payments, for $150 million. The deal was intended to cement dLocal’s footprint in Africa by acquiring Aza’s proprietary liquidity and settlement infrastructure, including valuable corridors like the one Aza operates with Banque du Caire in Egypt.

However, the deal has effectively collapsed.

Following a “third-party complaint” regarding Aza Finance’s operations, dLocal halted the acquisition. This left dLocal with a $22.5 million bridge loan extended to Aza for working capital — an asset now considered at risk.

The fallout from the Aza deal forces dLocal to rely on organic growth (like the Grey partnership) rather than buying market share. While dLocal is reportedly pursuing a “restructured deal” for specific Aza assets, the failure underscores the due diligence risks inherent in large-scale African M&A.

Broadening the Base: Bolt, Temu, and Shein

Despite the Egyptian headwinds and the Aza setback, dLocal’s diversification thesis is holding. The company is no longer reliant on a single country to sustain its African narrative.

• Ride-Hailing: dLocal strengthened its partnership with Bolt, processing payments for the mobility giant across Africa.
• E-commerce Giants: The “Other Africa” growth is also being fueled by Asian e-commerce behemoths, likely Temu and Shein (often alluded to as “large Chinese merchants” in industry reports), which are seeing rapid adoption in markets like South Africa.
• Product Rollout: dLocal has launched its “BNPL Fuse” (Buy-Now-Pay-Later) product in six countries, with volumes growing 2.5x QoQ. This suggests dLocal is successfully cross-selling higher-margin products to its existing African merchant base.

Resilience Through Diversification

The Q3 2025 report offers a sober but resilient outlook for dLocal in Africa. The company has proven it can absorb a massive shock in a primary market (Egypt) without capping its overall regional growth, thanks to the explosive performance of Nigeria and the “Other Africa” segment.

Comparative Performance: Latin America vs. Africa & Asia

The “Grey Propels dLocal” narrative is more than just a headline; it is the blueprint for the company’s survival and resurgence in the region. By hitching its wagon to the fastest-growing local fintechs and diversifying away from single-market dependency, dLocal is navigating the turbulence of African finance — bruised by Egypt, but buoyed by Nigeria.