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Finance - News around Africa - Profiles - March 9, 2020

Fintech start-up Paga in partnership with Visa on Payments and Technology

Visa launches a partnership with Paga, as fintech becomes Africa’s best funded start-up sector with thousands of ventures vying to scale digital-finance products to the continent’s unbanked and underbanked consumers and SMEs.

Founded in Lagos, Paga scaled its fintech business in West Africa, and has expanded its operations to Ethiopia and Mexico. The start-up has created a multi-channel network for over 14 million customers in Nigeria to transfer money, pay-bills and buy things digitally through its mobile-app or 24,840 agents.

The partnership allows Paga account holders to transact on the global network made available by Visa. It will also see both companies work together on tech. Visa’s partnership with Paga doesn’t include investment in the start-up, but it is expected to drive larger payment volumes for both companies — and Visa’s priorities in Africa.

“We want to digitize cash, that’s a strategic priority for us. We want to expand merchant access to payment acceptance and we want to drive financial inclusion,” said Otto Williams, Visa’s Head of Strategic Partnerships, Fintech and Ventures for Africa.

Fintech start-up Paga in partnership with Visa on Payments and Technology
Otto Williams – Head of Strategic Partnerships, Fintech and Ventures for Africa, Visa

As a company, Visa maintains multiple partnerships with Africa’s largest banks, but collaborating with the continent’s VC backed fintech ventures has taken centre-stage. This was confirmed in Visa’s recent 2020 Investor Day presentation, which dedicated several slides to its strategy of “partnering with leading African players” in the start-up ecosystem.

The global financial services company has entered into collaborations with several African fintech ventures, such as B2B payments company Flutterwave and South African start-up Yoco, which is focused on enterprise payments services and hardware for SMEs.

Visa has also jumped into the venture funding realm in African fintech. In 2019 Nigerian financial services company Interswitch reached a $1 billion valuation and unicorn status after Visa acquired a minority equity stake.

“Based on the partnership we’re going to launch QR codes and NFC [payments] into the market in Nigeria — alternative ways of receiving payments than bringing out a physical card,” said Paga’s CEO, Tayo Oviosu.

Fintech start-up Paga in partnership with Visa on Payments and Technology
Tayo Oviosu – CEO, Paga

The Paga-Visa arrangement will bring new merchant options to Paga’s network, and according to Oviosu, Visa and Paga’s engineering teams have already started working together. Paga expects to roll-out these new options in Nigeria sometime in second-quarter 2020.

The company boasts 14 million customers in Nigeria who can transfer funds from one of Paga’s 24,000+ agents or through the start-up’s mobile apps on iOS or Android, or via USSD in feature phones. There are also remittance partnerships with the likes of Western Union to boot.

READ MORE: Nigeria’s Fintech Startup ‘Carbon’ sets up $100k Disrupt Fund

The start-up is pivoting toward becoming less of a Nigeria-centred company and more an emerging markets fintech platform. In January, Paga acquired Ethiopian software development company Apposit, on plans to launch in the East African country.

After Nigeria, Ethiopia has Africa’s second-largest population of 114 million. Paga has also opened an office in Mexico and will launch its payments products there this year.

Of course, Visa’s isn’t the only American financial services firm backing African tech companies. In 2019, its rival Mastercard invested $50 million in Pan-African e-commerce venture Jumia. The two are working together on developing fintech services across Jumia’s customer network.

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