Visa has formed a partnership with Nigerian start-up Paga in payment and financial technology,media reported. Lagos-founded Paga is understood to have expanded its fintech business in West Africa before targeting Ethiopia and Mexico.
So far, the start-up has built a multi-channel network for more than 14 million users in Nigeria that can transfer, pay and digitally purchase through its mobile app or 24,840 agents.
The partnership with Visa will now allow Paga account holders to trade on Visa’s global network. In addition, the two companies will work together in technology.
The partnership reflects the US financial services giant’s strategy of partnering with top African start-ups to expand in Africa.
Visa’s partnership with Paga, while not including investments in the start-up, is expected to result in a larger total of payments for both companies and priority business for Visa in Africa.
“We want to digitize cash, and that’s our strategic focus. We want to expand the number of merchants that accept payment channels, and we want to promote financial services inclusion,” said Otto Williams, Visa Africa’s strategic partner and head of fintech and venture capital.
The Paga-Visa partnership will bring new merchant options to Paga’s network.
“Based on the partnership with Visa, we’re going to be rolling out QR code and NFC (payment) in the Nigerian market, which is another way to receive payments, rather than taking out a physical card,” said Tayo Oviosu, paga’s founder and CEO. “
According to Oviosu, Visa and Paga’s engineering teams have already started working together, and Paga expects to launch these new service options in Nigeria sometime in the second quarter of 2020.
The start-up is shifting course, moving away from limiting itself to a Nigeria-centric company but as an emerging market fintech platform. In January, Paga bought Apposit, an Ethiopian software development company, in the hope of launching its products in the East African country. Ethiopia is reported to have a population of 114 million, second only to Nigeria, the second largest in Africa.
Paga also opened an office in Mexico and will launch its payment products there this year.
According to the latest vC report, just as Visa-Paga is working together, fintech has become Africa’s most well-funded start-up, with thousands of venture capital firms racing to roll out digital financial products to the continent’s unbanked and under-deposited consumers and small and medium-sized businesses.
Visa has a variety of partnerships with Africa’s biggest banks, but partnerships with VC-backed fintech companies on the continent are at the centre. This is also reflected in Visa’s recent Investor Day 2020 speech.
In addition, the global financial services company has established partnerships with several African fintech companies, such as B2B payments company Flutterwave and South African start-up Yoco.
In addition, Visa has entered the venture capital sector of financial technology in Africa. In 2019, Interswitch, a Nigerian financial services company, was valued at $1 billion and a unicorn after Visa acquired a minority stake.
Otto Williams, Visa’s head of Africa strategy, points out that non-equity partnerships will remain the company’s main focus, although they could lead to future venture capital.
Of course, Visa isn’t the only U.S. financial services company that supports African technology companies. In 2019, rival Mastercard invested $50m in Jumia, a pan-African e-commerce company. The two companies are currently working together to develop financial technology services across jumia’s customer network.