Interswitch Limited and Visa Incorporated recently announced a partnership deal that would see the FinTech firm introduce advancements in digital payments across Africa. It aims to drive financial inclusion across the continent by providing new customer and merchant experiences, supporting the growth of digital commerce.
“Sub-Saharan Africa is the fastest-growing payments market in the world, with growth driven by a young and dynamic population, rapidly evolving consumer behaviour, and an increasing desire for payment solutions that can be accepted across the continent and abroad,” said Mitchell Elegbe, the Founder and CEO of Interswitch.
He further expressed his delight that “Interswitch has formed a partnership with Visa,” with whom the company can “plan to drive the next phase of transformation in the African payments landscape.”
The new deal earns Visa a significant minority equity stake in Interswitch making it one of the most valuable African FinTech businesses with a valuation of US$1 billion. Visa would be partnering alongside notable investors; Helios Investment Partners, TA Associates, IFC and company management. This partnership would expand the reach of the FinTech company across Africa. It would further enhance it to provide service for the unbanked and undersaved.
Andrew Torre, Regional President CEMEA, Visa, in his statement said: “Africa is a priority region for us, and we continually seek strategic partnerships with local players to further strengthen our leadership position and enhance the payments ecosystem across the continent.”
Since inception in 2002, the FinTech firm has built its momentum as a leading tech firm in Nigeria, disrupting the traditional cash-based payments systems by introducing electronic payments processing and switching services. Interswitch now records a monthly 500 million transactions.
In sub-Saharan Africa, the advent of Financial Technology (FinTech) firms have become a major game-changer that has re-shaped the structure of its financial industry. New FinTech innovations have encouraged brought about a rise in the financial ecosystem. FinTechs are known for innovatively challenging the traditional financial structures of its economy also, creating efficiency gains by opening up the financial services value chain. They have brought about financial inclusion and serving as a catalyst for innovation in other sectors, such as agriculture and infrastructure.
FinTechs represents a disruptive competitive force that will have a major role in shaping the structure of the financial industry globally. They primarily affect market structure by bringing new technologies that reduce the costs of financial services, create market access opportunities for new entrants (nonbanks), broaden access to new segments of the market and customers, and affect the competitiveness of existing incumbents.
Interswitch is a Nigerian owned FinTech firm. It uses a ‘switching’ infrastructure to connect the different banks in Nigeria and provides technology for ATM cards. It has over 11,000 ATMs on its network. It is the owner of Nigeria’s most used payment card, Verve, which accounts for 18 million of the current 25 million cards in circulation in the West African state. Verve has also been launched in Kenya.
Interswitch has also developed other smart technologies like Quickteller, an online payments platform; Retailpay, a mobile business management platform; and Smartgov, identity management and e-payment infrastructure for state governments.
By Ishioma Eni