Interswitch is a pioneering fintech in sub-Saharan Africa. It is an Africa-focused integrated digital payments and commerce company that facilitates the electronic circulation of money as well as the exchange of value between individuals and organisations on a timely and consistent basis.
But things have gone really south for the fintech company and if care is not taken Interswitch may fail. The challenges are numerous. There are attacks from global fintech companies like Paypal and Stripe which have provided other ways for Nigerians and Nigerian companies to do ecommerce online. Interswitch used to be the only company to take companies online to collect payments (remember the unfortunate N100,000 merchant activation fee); not anymore. As these companies strengthen their positions in Africa, Interswitch will lose its dominant capabilities.
Apart from its core infrastructure, the company does not come out as being innovative. Its products are largely ordinary.
And besides the foreign fintechs, startups like Flutterwave and Paystack are emerging and they have real Africa-wide visions. The latter just raised $1.3 million today. It took Interswitch ages to expand outside Nigeria despite having, at a time, all the opportunities to dominate sub-Saharan Africa digital payments.
In the past, merchant integration with GTBank used to offer the options of GTPay and Interswitch, now it is only GTPay as GTBank had removed Interswitch. Other banks are increasingly pushing their brands over Interswitch.
Sure the company understands these challenges and have made some acquisitions. It bought VANSA for $50 million in cash in October 2015. That was after it bought Paynet for an undisclosed amount few months earlier. It has sought diversification by investing in SlimTrader and Africa Courier Express. But generally, these are all hail marys because the company is not locking any barrier of entry into its core business. The growth drivers are in continental Africa and Interswitch, unlike in the past, does not seem to be the potent competitor that can win the race right now.
It needs to invest in innovation and stays a step ahead of its peers to ensure its business remains viable within the next five years. The old rumored IPO in London had died down because global players could not really see what they will be buying into. They had expected $1 billion. But if you look critically, Interswitch may not be worth that much since its main competitor, eTransact, is worth about N5.25 billion.