LAGOS, Nigeria — Nigerian digital payments firm Interswitch has become the next unicorn after it announced its strategic partnership with Visa that will further advance the digital payments ecosystem across Africa.
“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, Founder and Chief Executive of Interswitch. “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.”
As part of the agreement, Visa will acquire a significant minority equity stake in Interswitch. The investment makes Interswitch one of the most valuable African FinTech businesses with a valuation of US$1 billion. Visa will join globally renowned investors, Helios Investment Partners, TA Associates and IFC, as shareholders in Interswitch, alongside Company management.
“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,” said Andrew Torre, Regional President CEMEA, Visa. “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 payments processing and switching services. Today, Interswitch is a leading player in Nigeria’s developing financial ecosystem with omni-channel capabilities across the payments value chain, processing over 500 million transactions per month in May 2019.
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 per cent 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.
Babatunde Soyoye, Helios’s co-founder and Managing Partner, 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 further collaboration with the Company alongside Visa.”
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.
The partnership will create an instant acceptance network across Africa to benefit consumers and merchants and facilitate greater connectivity for communities. Both parties will also retain their respective independent solutions, and Interswitch will retain its scheme neutral strategy.
The transaction is subject to the relevant regulatory approvals and is expected to close by Q1 2020.
FT Partners acted as exclusive strategic and financial advisor to Interswitch on this transaction.