Nigeria: Interswitch secures US$110 million investment to scale up operations

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  • In Nigeria, where an estimated 38 million people, or 36% of adults, remain financially excluded, the government has set a target of 95% financial inclusion by 2024
  • Interswitch secured US$110 million joint investment from LeapFrog Investments and Tana Africa Capital
  • The firm can be termed as the backbone of Nigeria’s online banking system and is well-known for its point-of-sale terminals, online consumer payment platforms, Quickteller, and Verve

Accelerating financial inclusion across Africa is increasingly on the agenda of most if not all countries across the continent. 

This has seen the creation of a lot of fintech firms working relentlessly to bring the unbanked and underbanked populations into the formal financial sector. 

In Nigeria, where an estimated 38 million people, or 36% of adults, remain financially excluded, the government has set a target of 95% financial inclusion by 2024. 

While this may seem like an ambitious goal, that will require institutions to re-strategize initiatives and policies to accelerate the delivery of financial inclusion services, a lot of tech-backed firms are being developed in the West African country to help achieve this goal. 

Among them is Lagos-based FinTech unicorn Interswitch which seems to have heeded that call, leveraging its position as a market leader in digital payment services to bridge the massive financial inclusion gap and help bring as many people into the financial and economic fold as possible.

The digital payment provider recently secured a US$110 million joint investment from LeapFrog Investments and Tana Africa Capital, the two private investment firms said in a statement. 

The investment will go towards scaling up Interswitch’s digital payment services across the continent. 

Although the exact terms of the transaction are yet to be disclosed, Interswitch Group CEO said in a statement that the company was “excited to welcome LeapFrog and Tana on board, as we continue our work to advance the future of the African payments landscape.” 

The new round of investment comes three years after the fintech firm received a US$200 million round of funding from Visa for a 20 per cent stake in the company.

Read: What next after Nigerian Fintech Unicorn, Flutterwave scandal?

The funding by Visa propelled Interswitch as one of Africa’s largest electronic payments and infrastructure companies with its valuation at US$1 billion. 

Interswitch can be termed as the backbone of Nigeria’s online banking system and is well-known for its point-of-sale terminals, online consumer payment platforms, Quickteller, and Verve, the biggest domestic debit card

In 2016, the firm announced plans to go public for the first time, pursuing a dual-listing on the London and Nigeria stock exchanges.

However, that plan seems to have been shelved following its investment from Visa. 

Alongside existing investors, LeapFrog and Tana plan to work with management to continue to drive Interswitch’s pan-African strategy, which includes acquiring new customers and building new products to support a financial inclusion strategy.  

“Interswitch, a pioneer in the African payments ecosystem, has been disrupting the cash economy, driving digital payments and promoting equitable financial inclusion in Nigeria for two decades. This investment by LeapFrog affirms the formidable talent at Interswitch and how well-placed it is to seize the significant opportunity in Africa’s evolving digital payments landscape,” said LeapFrog Investments, partner, head of Africa financial services, Karima Ola, in a statement.

The firm which was founded in 2002 by Mitchell Elegbe, pioneered the infrastructure to digitize Nigeria’s then predominantly paper-ledger and cash-based economy.

From its home base of Nigeria, Interswitch has expanded its physical presence to other African countries including Uganda, Gambia, and Kenya.

The company also sells its products in 23 African countries and launched a partnership in August 2019 for its Verve cardholders to make payments on Discover’s global network.

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Kanyali Cynthia is a Kenyan-based financial journalist with key specialisation in data and tech reporting and over eight years of experience.

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