GLOBAL financial giant Visa is planning to acquire a 20% stake in Nigerian payment processing company Interswitch in a deal said to be worth $200m that would boost its value to a whopping $1bn.
Founded in Lagos in 2002 by Nigerian entrepreneur Mitchell Elegbe, Interswitch uses switching infrastructure to connect the different banks in Nigeria and provides technology for ATM cards. It is the owner of Verve, Nigeria’s most used payment card, accounting for 18m million of the 25m cards in circulation in the country and of late has spread its network across the African continent.
Under the terms of the new deal, Visa will become a major stakeholder in Interswitch, putting it in the tech-world unicorn status for companies that have a $1bn plus valuation. Interswitch, which has recently diversified into other sectors including e-health with the acquisition of eChat, will now be able to boast of having another major global partner after the likes of Helios Investment Partners, TA Associates and IFC, all took out stakes in it recently.
Interswitch now processes over 500m transactions per month in a market that is seeing soaring growth in electronic payments. Further progress is expected to be driven by population and urbanisation growth, gross domestic product growth above the global average, increased mobile and internet penetration, as well as a supportive regulatory landscape for electronic payments and financial inclusion.
Mr 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.”
In addition to its switching and processing services, Interswitch owns Verve, the largest domestic debit card scheme in Africa with more than 19m cards activated on its network and the Quickteller consumer payments platform from which consumers can initiate peer-to-peer transfers, bill payments, airtime purchases, and other e-commerce transactions. The latter processes 42m transactions monthly through direct, indirect and Paypoint channels.
Andrew Torre, the regional president of Visa Africa and the Middle East, added: “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.”