| Nigeria | Guaranty Trust Holding Company (GTCO) launches Squad. GTCO, the holding company for GTBank, has launched Squad, a digital payments solution for businesses that allows merchants to receive payments both online and offline from their customers. This comes after approval from the Central Bank of Nigeria (CBN) for HabariPay Limited, a new payments subsidiary. Nairametrics |
| | EDITOR'S NOTE | This is an interesting development that could potentially shift the payments landscape in Nigeria. GTBank is one of the biggest Nigerian financial institutions, with a wide base of retail and corporate customers, and diversified lines of income from lending, payments, and other financial operations.
The big question is why payments? According to GTCO’s 2021 investor presentation, GTBank’s interest income, which is its core business, saw an 11% decline from the previous year. In fact, yields on interest-bearing assets have declined consecutively for the last five years. Compare that with fees and commissions income, which only contributed less than 25% to overall revenue but grew by almost 39% from 2020. If we focus on just e-business, which includes fees on card transactions and digital payments, it tells an even clearer story: income from this segment hit N21B (~$50m) in 2021, a 79% increase from the previous year.
With this rapid growth in payments revenue and a decline in income from its core lending business, it is no surprise that GTCO is actively pursuing a standalone payments strategy. Payments offer not just incremental revenue but could actually be critical to the group’s future.
With Squad, GTCO can up-sell existing SMEs and large corporate businesses and earn additional revenue from processing payments. Also, for GTBank-issued cards, Squad can eliminate intermediaries in the payment flow and earn more margin per transaction. Combined with POS solutions that don’t require a terminal and the provision of virtual account solutions, Squad presents a compelling suite of products for existing and prospective GTBank businesses.
Despite these stated advantages, there is no guarantee of success. The payments industry in Nigeria is highly competitive. Squad will have to figure out how to adequately compete along different axes of payments including pricing, reliability, user experience, rapid iteration, and ease of integration. How these capabilities play out against expected systemic constraints will become clearer in the near future. |
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| Kenya | M-PESA partners with Visa to offer virtual cards. Safaricom's M-PESA has partnered with Visa to launch the M-PESA GlobalPay Visa Virtual Card. As the name suggests, the co-branded virtual cards will allow M-PESA customers to pay for goods and services outside their countries. IT News Africa |
| | EDITOR'S NOTE | We have written extensively about the recent trend of partnerships between card networks like Visa and Mastercard and big local digital wallets like OPay and Orange Cash. In this case, the incentives and potential benefits are the same. Unlocking international ecommerce for local wallet-holders is a trend we expect to continue, especially in regions with a large base of users and restrictions on FX spending from local traditional banks, like Nigeria and Kenya. |
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| Africa | What is the actual current state of VC funding in Africa? In this thread, Stephen Deng (@mrstephendeng), a partner at DFS Lab, initiates an interesting conversation about how lags between the completion of funding rounds and the public announcements distort the perception of investment activity on the continent. Twitter |
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| Global | Bankingly raises $11 million in new funding. The new funding will allow the fintech, which partners with banks and other financial institutions to build digital solutions, deepen penetration in existing markets, and expand to new countries in Africa, Asia, and Latin America. The new round was led by Dalus Capital with participation from IDB Labs, Elevar Equity, and other new and existing investors. Kenyan Wall Street |
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| South Africa | Talk360 raises $4m seed round. The South African international calling solution, which allows people to call any landline or mobile in the world is set to use the new funding to build out a new payment platform for its users. The new round of funding was led by HAVAIC, 4Di Capital, and included other fintech angel investors. Disrupt Africa |
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| Africa | Finclusion Group raises undisclosed funding. Finclusion Group, a credit-led neobank, has raised an undisclosed amount of funding from the Cairo Angels Syndicate Fund (CASF). The new round of funding will be used to support continued product development and expansion into African countries. TechCabal |
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