| Introducing Paystack Catalyst | 
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| Africa | Visa launches a fintech accelerator in Africa. Global payments giant, Visa, has launched an accelerator program for African fintechs. Accepted startups will have access to training, mentorship, and follow-on funding after completing the program. Visa |
| | EDITOR'S NOTE | Visa, along with Mastercard, stands as one of the leading card networks on the continent. Traditionally, customers were acquired by local banks and provided with Visa or Mastercard cards. However, a significant shift has occurred in the past decade, as the acquisition of financial accounts in Africa has transitioned from banks to mobile money and fintech providers, which may or may not issue payment cards to their users. This trend is particularly interesting, given that Africa has the lowest levels of financial account ownership while simultaneously being one of the fastest growing in the world.
By acknowledging the growing likelihood of fintechs acquiring new users instead of banks, Visa can gain a strategic edge by strengthening relationships and making investments in this fast-growing non-bank sector. This not only helps Visa mitigate potential disruptions from banks but also positions the company as the preferred partner for fintechs looking to offer both traditional and innovative payment solutions. |
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| Kenya | KCB partners with Visa and Thales to launch tap-to-pay solution. KCB, a leading Kenyan commercial bank, has partnered with Thales, a global card and payments provider, and Visa to launch tap-to-pay payments in Kenya. With this solution, users with Android devices can tap on POS terminals to complete payments. Developing Telecoms |
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| Africa | The state of Web3 in Africa. EMURGO has published a report on Africa's emerging Web3 and crypto trends. EMURGO |
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| Nigeria | NIBSS lowers fees for instant inter-bank transfers. Nigerian Inter-Bank Settlement System (NIBSS) — Nigeria's central payment switching infrastructure — has announced a reduction in fees for instant inter-bank transfers. Starting from July 1, the fees will decrease from ₦5 to ₦3.75. These reduced charges will be applied to financial institutions such as banks, microfinance banks (MFBs), and payment processors that are connected to the NIBSS network. TechCabal |
| | EDITOR'S NOTE | Payment providers incur variable costs for each bank transfer they execute on behalf of a customer. These costs, which are paid to service partners, are typically deducted from the transaction fees charged to the customer.
The gross profit for the typical payment provider relies on the fees they charge and the costs they incur for each transaction. However, as we’ve noted previously, competition and regulation limit how much a payment provider can charge the customer. This is especially true for bank transfers in Nigeria, where the Central Bank of Nigeria (CBN) has set caps on fees for bank transfers.
Consequently, a decrease in the fees charged by NIBSS for bank transfers immediately leads to an increase in gross margins for these financial institutions connected to the network.
How does NIBSS sustainably implement these price reductions? As the central switch and the fundamental layer for inter-bank money movements in Nigeria, NIBSS does not have underlying partners that charge per-transaction fees. This means that its business model is more like a software company with primarily fixed costs and near-zero marginal costs. As a result, NIBSS can achieve high margins if its products achieve a certain level of adoption and can effortlessly increase that margin as adoption grows.
And that’s what has played out: In the first quarter of 2023, NIBSS’ NIP platform facilitated a staggering 1.23 billion bank transfers — a 296% increase compared to the same period in 2020. This tremendous growth in bank transfer payments has brought NIBSS a windfall of profits.
That said, payment companies are usually regulated private enterprises providing a public good. This means they must balance seeking profits from users with pushing the regulator’s vision for financial services for its citizens (this is most apparent for NIBSS, a private switching company partly owned by the CBN).
Cash payments are often perceived as having no associated costs at the time of a transaction. So for a country like Nigeria with high cash adoption, the regulator is incentivised to keep digital payment fees as close to zero as possible. Over the past decade, electronic transfer fees set by the CBN have significantly decreased, going from as high as N500 to as low as N10-N50 today.
These reductions in NIBSS fees are likely a precursor to a downward revision of bank transfer charges by the CBN. This suggests that any gross margin improvements financial institutions anticipate could be short-lived. However, considering the continuously increasing transaction volumes and revenue, there are unlikely to be many complaints if this scenario unfolds. |
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| Nigeria | Nigerian government set to tax sale of digital assets. The Nigerian government has introduced new taxes on gains made from selling digital assets, including cryptocurrencies. This change was proposed in the newly signed Finance Act. Nairametrics |
| | EDITOR'S NOTE | The gains on the disposal of these assets are usually recorded in cryptocurrency, but taxes are paid in fiat currency. Also, companies with tax obligations must use local financial institutions to remit their taxes to the authorities. But in 2021, the Central Bank of Nigeria (CBN) restricted licensed financial institutions from serving crypto companies.
So it’ll be interesting to see if the potential upside in tax revenue is enough to reverse the CBN’s restriction on working with cryptocurrencies and also provide a framework for regulating them. |
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| Africa | Klasha obtains MSB license in Canada. Klasha, a cross-border payments and ecommerce platform, has obtained a Money Services Business (MSB) license from the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). With this newly acquired license, Klasha will be able to provide payment services in Canada. TechCabal |
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| Nigeria | FairMoney completes ₦2.5 billion commercial paper issuance. FairMoney, a leading Nigerian digital lender, has raised ₦2.5 billion in short-term funding via commercial paper issuance. The funding will be used to cover short-term liquidity needs and finance the growth of its loan book. TechCabal |
| | EDITOR'S NOTE | A commercial paper is an unsecured, short-term debt instrument that businesses issue to cover short-term liabilities. In the case of FairMoney, a digital lender that has likely raised both equity and high-interest debt denominated in USD but operates by lending in a local currency, obtaining debt locally might be cheaper than incurring FX conversion losses or higher interest payments from international lenders.
These constraints are not peculiar to FairMoney, so we expect more digital lenders to adopt this funding option in the future. |
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| Nigeria | Fast Credit raises ₦3.6 billion in commercial paper issuance. Fast Credit, a Nigerian digital lender, also raised ₦3.6 billion via commercial paper issuance. The funds were raised through different issuances with interest rates ranging from 15% - 17.25%. Tech In Africa |
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| DRC | Tuma raises $500K in funding. Tuma, a DRC-based provider of tap-to-pay POS solutions, has received $500k in new funding. Investors in this round included Visa Visible Hands and the Social Justice Fund. The funds will be used to drive product development and geographic expansion. Afrikan Heroes |
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| Tunisia | Medius acquires Expensya for an undisclosed sum. Expensya, a Tunisian expense management company with a global presence, has been acquired by Medius, a Swedish payments company. Medius plans to integrate Expensya's expense management products with its Accounts Payable (AP) automation solution as a business offering. Disrupt Africa |
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