Interswitch partners with Visa to improve digital payments in Africa
Interswitch Limited and Visa have announced a strategic partnership that will further advance the digital payments across Africa. Interswitch Limited is a leading technology-driven company which focus on the digitization of payments in Nigeria and other countries in Africa whiles Visa Inc, on the other hand, is the world leader in digital payment.
Visa will acquire a minority equity stake in Interswitch, joining global investors including Helios Investment Partners, TA Associates and IFC, as shareholders in Interswitch, alongside Company management.
Via the partnership, an instant acceptance network across Africa will be created, in a bit to benefit consumers and merchants and facilitate greater connectivity for communities. Both companies will retain their respective independent solutions, while Interswitch will also retain its scheme neutral strategy.
Interswitch was founded in 2002 and has throughout their service has disrupted the traditional cash-based payments value chain in Nigeria by introducing electronic payments processing and switching services. Due to their hard work and consistency in the digital market, Interswitch has been a leading player in Nigeria’s developing financial ecosystem with omnichannel capabilities across the payments value chain and has processed over 500 million transactions per month in May 2019.
Electronic payments in Africa accounted for only 12 per cent of transactions by volume in 2018 as compared to 54 per cent in Europe and 79 per cent in North America. Sub-Saharan Africa which is the fastest-growing digital payments market in the world, has an electronic payment volume expected to grow at a CAGR of approximately 35 per cent from 2018 to 2023 in the region which excludes South Africa. This progress is expected to be driven by the deepening payments infrastructure, population and urbanization 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.
Nigeria, which is Interswitch’s main market 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 per cent and 59 per cent 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 per cent between 2018 and 2023.
Adding to its switching and processing services, Verve, which is the largest domestic debit card scheme in Africa with more than 19 million cards activated on its network as of May 2019 is owned by Interswitch. 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 has delivered in consecutive years of sustainable profitable growth due to its unique market capabilities.
Founder and Chief Executive of Interswitch, Mitchell Elegbe, said; “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. ”
Regional President CEMEA, Visa, Andrew Torre, also added that; “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.”
Helios’s co-founder and Managing Partner, Babatunde Soyoye, added, “A strategic investment by Visa, the world’s leader in digital payments, into Interswitch is a substantial endorsement of the Company’s expertise in African payments. As an active investor in leading African payments businesses, we see tremendous opportunities to digitise payments across the continent and have worked closely with Interswitch’s management team to build a high quality and scalable platform geared to address some of these opportunities. We look forward to furthering collaboration with the Company alongside Visa.”