Interswitch Founder, Mitchell Elegbe Talks How to Boost E-payments in Africa

Interswitch needs no introduction when it comes to integrated digital payments and commerce in Africa. The fintech unicorn is a major player in the continent’s transition from cash to cashless transactions, and the visionary Mitchell Elegbe is at the helm.

Founded in 2002 by Elegbe, the company processes electronic payments, builds and manages payment infrastructure, and delivers cutting-edge payment products and transactional services throughout the continent.

I was opportune to pick the brain of the Managing Director and Chief Executive Officer of Interswitch Group, Mitchell Elegbe, on the company’s journey and the future of Africa’s fintech industry.

BEA: What are some of the policies Africa needs right now to promote e-payments?

Mitchell Elegbe: The digital payments market has matured quickly in Africa; however, with cash still accounting for (95% of transactions in Nigeria and 85% in Sub-Saharan Africa), there remains significant opportunity for growth. 

This being said, it is important that the broader environment is favourable for investment in payment and digital infrastructure, especially in the rural, underbanked areas where access to finance and payment infrastructure is limited, which often restricts the opportunity for e-payments.

In Nigeria, we have been lucky in this respect; the government and regulators largely support the country’s digital payment strategy. However, across Africa, there is a need to continue developing key infrastructures such as affordable and consistent internet access, which increases opportunities for payment services, entrepreneurship, and innovation. 

Additionally, it is important to note the banking infrastructure’s role in this. Partnerships with national banks are key to facilitating and developing the growth of digital payment and e-commerce services. We are already seeing this in Nigeria, where The Central Bank of Nigeria (CBN) has reduced card fees, limited ATM withdrawals and levied large cash deposits as it continues to push its cashless agenda, and at Interswitch, we have worked closely in partnership with many of the largest banks since our inception. 

BEA: What inspired the creation of the payment card brand – Verve?

Mitchell Elegbe: Interswitch was founded in 2002; it was not about solving a payments problem but a social one. The focus has always been on making payment an invisible and seamless part of everyday life by creating solutions that enable individuals and communities to transact more efficiently with minimal disruption to their lives. 

Before Verve, international card schemes dominated Nigeria, and there was a gap in the market for a domestic card scheme specifically tailored to the local consumer. In answer to this, in 2009, Interswitch launched Verve, a pan-African card solution tailored to the Nigerian people, offering products and solutions that enable consumers to transact all over Nigeria.

Today it has grown to be the largest domestic debit card scheme in Africa, and can now be used, not only across the continent but in 185 countries around the world, thereby effectively meeting the needs of its increasingly global customer base.

BEA: What are Interswitch’s plans to expand the use of Verve across Africa?

Mitchell Elegbe: Nigeria, the largest economy in Africa, continues to represent the largest single geography for us. We still see significant opportunities across the country as we continue to serve the financial and technological ecosystem. 

However, Verve’s success as the leading domestic card scheme in Nigeria positions us well to penetrate other markets using our existing channel partners, particularly card issuers with a presence beyond Nigeria. Broadly speaking, Sub-Saharan Africa represents a great opportunity, particularly as we continue to see population growth, greater urbanisation, growth in consumer spending, and increased use of mobiles and internet services.

BEA: How does Interswitch promote financial inclusion across Africa?

Mitchell Elegbe: Financial inclusion is a core part of Interswitch’s strategy and fundamental to our daily activities. Today, more than 60 percent of the Nigerian population remains unbanked or underbanked, presenting a significant opportunity to broaden access and deepen the financial ecosystem. 

Interswitch is very much at the forefront of this, developing infrastructure and products to help bring financial services to those lacking access to traditional banking. Since our inception we have been working to deliver electronic payment services and products to the unbanked and underserved, partnering with financial service providers, merchants, billers and other organizations, all with a shared aim of providing secure financial transactions nationwide. 

Our network of agents under Interswitch Financial Inclusion Services (IFIS); a subsidiary of Interswitch Group, is one of the largest agent network providers in the industry and has made significant strides in bridging the gap between unbanked and banked populations. Through our network, we are able to accelerate and deepen financial inclusion in the country by providing basic infrastructure and facilitating a range of financial services to underserved communities. 

However, there is much work to be done across the continent, and our focus remains on how we can drive access to our products and services to more communities, not just within Nigeria but across the continent more broadly.

BEA: Interswitch recently acquired eClat, a health tech company. What inspired this move?

Mitchell Elegbe: The application of digital payments is sector-agnostic, and with the increasing adoption of technology and digital payments across Nigeria and Africa, opportunities to broaden the payments landscape continue to present themselves. We like to look across the entire value chain to pursue opportunities in industry verticals across Nigeria and Africa where we feel we can apply our technology to help solve a particular industry’s challenges. The eClat acquisition is an example of this.

The healthcare industry is a good example of where we can help improve the sector, particularly around improving efficiencies, which will ultimately benefit the customer in terms of service and experience. However, it also has broader applications, as we have seen during the pandemic, where, along with eClat, we developed a free-to-use virus symptom tracking app to help governments and healthcare authorities better track the spread of the virus. [The app has now been employed across 20 states in Nigeria.]

In addition to this, Interswitch serves businesses and public sector bodies across retail, telecoms, financial services, alongside other industries in the Nigerian economy. As our services are already established across key sectors, we believe growth will come with increasing utilization of digital payment across them.

BEA: How have Interswitch’s partnerships with fintech companies panned out?

Mitchell Elegbe: At Interswitch, we place great value on our partnerships, and developing these relationships has always been fundamental to what we do. 

We have a number of successful partnerships with companies across the sector, including American Express, Mastercard, Discover Global Network, UnionPay, and of course, Visa. These partnerships focus on broadening payments across Africa, and we all share a common vision to make payments across the continent more efficient.

BEA: Do you see a future where Africa’s fintech companies collaborate more?

Mitchell Elegbe: The African fintech scene is vibrant and expanding rapidly. Fintechs in Africa are all essentially striving to solve the issues that arise from a vast underbanked and underserved population with very limited access to Finance and, as a result, unable to take part in the opportunities available across economies. So, in that sense, we all share a common vision, and it is a very large market.

As the landscape evolves, there will be opportunities for further partnerships to develop in areas that benefit not just the companies but the communities and customers they serve. From Interswitch’s perspective, we are constantly looking for opportunities to drive growth as we and the market evolve. 

BEA: How do you see Africa’s fintech industry evolving over the medium to long term?

Mitchell Elegbe: The African FinTech industry is well positioned for further growth, which could be accelerated by COVID-19, with more people turning to cashless payments during the pandemic to reduce virus transmission, and businesses increasingly adopting digital services to allow continuity of commerce crisis. 

Additionally, FinTech in Africa has many things working for it – favourable demographics, the expansion of infrastructure, greater adoption of digital technologies, and significant demand for these services. This demand is largely being driven by the rapidly expanding and youthful population, who require access to financial services and banking to help unlock opportunities and tap into innovation and the entrepreneurial landscape that continues to flourish.

Looking locally, Nigeria is quickly becoming the tech capital of Africa, with a vibrant, growing tech sector, and Sub-Saharan Africa more broadly remains the fastest growing digital payments landscape in the world. Last year Africa’s tech start-up industry achieved a record-breaking year with 311 companies taking a combined US$491.6m of funds, and FinTech remained one of the most attractive sectors with 77 start-ups receiving US$107m in investment. 

The growth of fintech in Africa and the push toward innovation show little sign of slowing down, and we think there are significant opportunities in the long-term.

The digital payments market has matured quickly in Africa; however, with cash still accounting for (95% of transactions in Nigeria and 85% in Sub-Saharan Africa), there remains significant opportunity for growth

Mitchell Elegbe

BEA: How is Interswitch tackling the challenges of the COVID-19 pandemic? 

Mitchell Elegbe: COVID-19 has posed collective challenges for businesses, governments, and communities on a scale not seen before globally. Around the world, we are rethinking the very idea of human contact within communities, and while Africa has a long history of dealing with epidemics, nations across the continent have had to make significant adjustments to try and contain the outbreak.

As with many other countries around the world, the Nigerian authorities implemented a range of lockdowns and restrictions in an effort to contain the spread of the virus in the country. However, Interswitch was able to remain fully operational, largely due to the systematic business continuity plan we deployed ahead of the restrictions to ensure all elements of the business were able to perform with no disruption. Although no one could foresee a crisis such as COVID-19 before this year, our investment in our technology and engineering teams positioned us well for managing the challenging circumstances caused by the virus. 

The lockdown had a profound impact on the life of Nigerians, with people having to adjust to working from home – many for the first time, with our employees being no exception. As with many large businesses, we were mindful of the impact of the changes on our staff, as the majority had to quickly adjust to working from home while continuing to execute a range of responsibilities, despite very different and often challenging situations.

I am proud and grateful to our staff for how they have responded to this crisis by ensuring business was delivered as usual, but also for the fantastic voluntary initiatives formed by employees to help fight the spread of the virus, such as the N305 million charitable fund raised primarily from voluntary salary donations from staff, contributions from members of our Board of Directors matched by additional funds from the company. 

In addition, as a business, we have been focused on how we can assist in the fight against the virus, and early on, we rolled out a free-to-use virus symptom tracking platform to help governments and healthcare authorities better track the spread of the virus. The app, developed by our Healthtech subsidiary, eClat, has now been employed across 20 states in Nigeria. 

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