I was 4th from left. (Thanks to the Ladies, I was almost the shortest 🙂

This is the second part to an earlier article about the state of online payment in Nigeria.

The first article got a lot of positive reception. I got a call from a UK consultancy outfit who needed assistance with profiling Nigeria’s online payment space. I got an invitation to speak at a fintech event and even became friend to a fintech lawyer, as a result 🙂

So, I tried to write a follow up article.

The opportunity did not come until my recent trip to attend Finance-Indaba, a Fintech conference/awards that took place in South Africa. The event is arguably one of the biggest fintech event in Africa and was well attended by key players in the financial technology ecosystem in Africa.

A Fintech Event Changed My View About One Of The “LEGACY” Online Payment Players In Nigeria.

One of the highlights of the Fintech conference was the pitch presentation by top 3 fintech players per category, of which VoguePay, Interswitch and Cellulant were drawn up in the payment and transfer category.

While VoguePay and Interswitch are the only Nigeria companies nominated in the payment and transfer award category, the 3rd nominee in the category is Cellulant, a Kenyan company with deep roots in Nigeria. You might easily remember them as the company behind the farmer-fertiliser programme of Goodluck Jonathan’s administration when Femi Adesina – who is now the president of AfDB – was Minister of Agriculture)

fintech-africa-event-voguepay-interswitch-cellulantI listened with rapt attention as Mitchell Elegbe, CEO of Interswitch gave his pitch. His speech literally changed my perception of a company I assumed had settled down to a legacy position. He left the stage giving me a complete rethink of Interswitch.

It was a good speech. I cheered him on 🙂


I have not always been impressed by Interswitch. In fact, since 2012, due to its poor posture to SMEs, companies like Cashenvoy, VoguePay, SimplePay, PayWithCapture and recently Flutterwave became emboldened to disrupt it’s market leadership especially among SMEs and startups.

The giant called Interswitch is awake…..

…. just as I wrote in my first article, the Interswitch giant is awake.

Asides other things they have done, I am particularly impressed with how the brand is trying to out-innovate itself by partnering with young talents at tech incubators like MEST and ccHub. I noticed this first-hand during my trip with one of our advisors to MEST, Ghana to present a copy of the #FINTECH book that he co-wrote.

From L-R: Myself, a manager at MEST, Ghana and Daniel Steeves (co-author of The Fintech Book)

Good Bye to Banks. Welcome to Fintech.

Interswitch’s partnership with MEST is already paying off with new product verticals driven by their “startup partners” like Asoriba-Gh. This is an opportunity that legacy incumbents in the Fintech ecosystem, especially banks can take a cue from, especially as the new role for Banks is changing from what it used to be.

For banks, the BBVA Open Talent is a perfect model for this type of partnership to work with startups as it allows fast innovation to occur without bureaucracy.

I made my presentation right after Mr. Elegbe and I shared about the opportunity that VoguePay is creating for small businesses to accept payment online. The truth is that the apathy of legacy players to small businesses became an opportunity for the new players like VoguePay to capitalize on.

Maybe you should watch my presentation 🙂 You can see the presentation of all speakers here

For us “new” players, it is no more just about competing for a small slice of the same market dominated by existing legacy players, but in creating a completely new market with new products. In essence, what new players are doing is using payment solutions to solve specific market problems. There are so many possibilities in this payment revolution, for example, we have:

  • A payment solution built on airtime and recharge card.

  • A payment gateway with a complete suite of tools for launching eCommerce, logistics, CRM and marketing for SMEs.

  • Bitcoin and blockchain financial payment solutions solving pain points in real estate, records keeping and commerce.

  • A payment gateway specifically for managing subscription billing services.

  • In-app and mobile commerce.

  • Etc.

My Biggest Concern For Online Payment In Nigeria Is Fraud – Here Are 5 Things We Can Do About It.

I have concerns about the online payment industry because it is very difficult to strike a balance between innovation, privacy and security.

In fact, only the paranoid can survive the potential onslaught of the dangers that lies ahead in the Nigeria payment space, especially due to increase in data phishing, card cloning and co-ordinated cyber attacks. To put this in perspective, here is a tweet from one of the fintech innovators who runs a payment aggregator. His tweet was favourited by the CEO of another payment startup.

To get some facts about the state of the industry, I pulled some extracts from 2016 edition of the electronic Payment Providers Association of Nigeria (ePPAN)’s quarterly e-Payment Review magazine. The edition featured the CBN Deputy Governor’s highlights on policy governing cashless payment in Nigeria, interviews of major stakeholders in Nigeria’s payment space as well as some gory data about the state of payment frauds in Nigeria.

So, what is the way forward?

1. COLLABORATION: There is need for serious collaborations among all stakeholders. Collaboration begins with sharing data among the key players including fraud histories and breaches. This can be in form of a centrally shared intelligence database connected by API that makes it easier to gain insights about fraudsters’ activities for knowledge sharing between all stakeholders.

2. FAVOURABLE REGULATIONS: There is need to adopt regulations that favour adoption of online payment, and security of transactions. It is obvious that the “unclear” regulation of mobile money has slowed its adoption in Nigeria. Nigeria can learn from its Ghanian counterpart on regulating mobile payment to the benefit of consumers (in Ghana, people earn interest on mobile money.

3. REDUCE COST OF CASHLESS TRANSACTIONS: Nigeria is largely a cash-driven economy and in many cases, the cost of cashless transaction is higher than paper-based transactions. Going cashless should have a major incentive because the growth of cashless payment will be stunted except the cost of cashless is lower than carrying cash.

4. PRIORITIZE IN-BOUND TRANSACTION: I was surprised to hear that Nigerians buy more from ASOS (a US-based online store) than they do on both Konga and Jumia combined. Maybe that explains the second surprise that the usage of PayPal in Nigeria is as high as $610 million spent in 2015 (and almost a $1B in 2016). If you flip the coin, that is a lot of revenue “lost” outside the country. While there is little anyone can do about this, we can make it easier for our local businesses to easily sell to foreign buyers and accept international payment locally. I am aware that FlutterWave, VoguePay and others have capabilities for this.

5. ADOPT ECOMMERCE: e-Commerce will be a major driver of online payment adoption in Nigeria. A recent study shows that out of approximately 50 million internet users in Nigeria, 65% already shop online and another 24% expect to do so in the future. With this kind of growth potential, the intention of the Senate’s for regulating this sector should be aimed at growing the ecosystem with healthy regulations.

    1 Response to "Thoughts On Interswitch, Payment Security And Online Payment In Nigeria"

    • ladun liadi

      Interswitch is one of the best thing that has happened to nigeria

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