Interswitch Limited, today announced a strategic partnership with Visa that is expected to expand the digital payments ecosystem across Africa, touted as the world’s most underpenetrated market.
The partnership will see Visa, a digital payment platform acquiring a significant minority equity stake in Interswitch, making it one of the most valuable African FinTech businesses with a valuation of US$1 billion. This will also see Visa among other globally renowned investors like Helios Investment Partners, TA Associates and IFC that have shares in Interswitch, alongside Company management.
According to Mitchell Elegbe, Founder and Chief Executive of Interswitch, the partnership will create an instant acceptance network across Africa to benefit consumers and merchants and also, facilitate greater connectivity for communities.
“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. I am delighted that Interswitch has formed a partnership with Visa, with whom we plan to drive the next phase of transformation in the African payments landscape,” Mitchell noted.
Also commenting on the partnership, Andrew Torre, Regional President CEMEA for Visa, 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. This partnership aligns with our global strategy to work with and invest in innovative partners, and we look forward to working with Interswitch to provide new consumer and merchant experiences and support the rapid growth of digital commerce across Africa.”
Founded in 2002, Interswitch disrupted the traditional cash-based payments value chain in Nigeria by introducing electronic payment processing and switching services. Today, Interswitch is a leading player in Nigeria’s developing financial ecosystem with omnichannel capabilities across the payments value chain, processing over 500 million transactions per month in May 2019.
In 2018, electronic payments in Africa accounted for only 12 percent of transactions by volume, compared to 54 percent in Europe and 79 percent in North America. Sub-Saharan Africa is the fastest-growing digital payments market in the world, with electronic payment volume expected to grow at a CAGR of approximately 35 percent from 2018 to 2023 in the region (excluding South Africa). This progress is expected to be driven by the deepening payments infrastructure, population and urbanisation growth, GDP growth above the global average, increased mobile and internet penetration, as well as a supportive regulatory landscape for electronic payments and financial inclusion.
Interswitch’s core market, Nigeria, is the largest economy in Africa with a rapidly growing electronic payments market. Point of sale (“POS”) and ATM transactions per adult grew at a CAGR of 94 percent and 59 percent from 2013 to 2018, respectively. In Nigeria, there were only 11 card transactions per adult per annum in 2018 compared to 92 in markets like South Africa, 126 in Brazil and 465 in the UK. Despite this market under-penetration, POS card transactions in Nigeria are expected to grow at a CAGR of 63 percent between 2018 and 2023.
In addition to its switching and processing services, Interswitch owns Verve, the largest domestic debit card scheme in Africa with more than 19 million cards activated on its network as of May 2019. The business also operates Quickteller, a leading multichannel consumer payments platform, driving financial inclusion across Nigeria with over 270,000 access points, as of 2018, from which consumers can initiate peer-to-peer transfers, bill payments, airtime purchases, and other e-commerce transactions, processing over 42 million transactions monthly as of 31 July 2019 (equivalent to over NGN560 billion (US$1.5 billion) through direct, indirect and Paypoint channels). Interswitch’s unique market capabilities and strong consumer proposition, has enabled it to deliver consecutive years of sustainable profitable growth.