Visa has partnered with Nigerian startup Paga for payments and technology.
Based in Lagos, Paga Scaled up the fintech business in West Africa before expanding into Ethiopia and Mexico.
The startup has set up a multi-channel network for over 14 million customers in Nigeria to transfer money, pay bills and buy things digitally via its mobile app or 24,840 agents.
The new agreement enables Paga account holders to conduct transactions across Visa’s global network. The two companies will also work together in the technology area.
The collaboration reflects a strategy by the American financial services giant to work with the continent's top startups in Africa.
Visa's partnership with Paga does not involve investment in the startup, but both companies are expected to generate higher payments – and Visa's priorities in Africa.
"We want to digitize cash, which is a strategic priority for us. We want to expand merchant access to payment acceptance and promote financial inclusion," said Otto Williams, Head of Strategic Partnerships, Fintech and Ventures for Africa at Visa.
The Paga Visa Agreement brings new merchant options to the Paga network.
"Based on the partnership, we will launch QR codes and NFC (payments) in Nigeria – alternative ways to receive payments as a physical card," said Oviosu.
According to Oviosu, Visa and Paga's engineering teams have already started working together, and Paga expects these new options to be rolled out in Nigeria sometime in the second quarter of 2020.
The startup is geared towards becoming a fintech platform for emerging markets rather than a company focused on Nigeria. In January, Paga acquired the Ethiopian software development company Apposit, which is to be launched in the East African country. After Nigeria, Ethiopia has the second largest population in Africa with 114 million.
Paga has also opened an office in Mexico and will launch its payment products there this year.
“There are several very large countries around the world in Africa, Latin America and Asia where these problems (financial inclusion) still exist. So our strategy is not an African strategy … We want to go where these problems are and to build a global payments business, ”Oviosu told Techcrunch in January.
The Visa-Paga partnership comes into being as fintech has become the best-funded startup sector in Africa, according to recent VC reporting, and thousands of companies are trying to deliver digital financial products to consumers and SMEs without continents and among continent's banks.
As a company, Visa maintains several partnerships with the largest banks in Africa. However, the focus is on working with the continent's fintech companies supported by VC. This was confirmed in the recent presentation on Visa Investor Day 2020, in which several slides were devoted to the strategy of “partnership with leading African actors” in the startup ecosystem.
The global financial services company has partnered with several African fintech companies, including the B2B payment company Flutterwave and the South African startup Yoco, ffocuses on corporate payment services and hardware for SMEs.
Visa has also entered risk finance in the African fintech sector. In 2019 Nigerian financial services company Interswitch reached $ 1 billion and unicorn status after Visa acquired a minority stake.
Visa’s Otto Williams, who has taken a leadership role in the company’s Africa strategy, noted that collaboration without shares will continue to be the primary focus – although this could later lead to VC.
"If we have a commercial partnership that creates the right … investment thesis … you know that these strategic partnerships affect risk investments," Williams said.
Of course, Visa is not the only American financial services company that supports African technology companies. In 2019, his rival Mastercard invested $ 50 million in the pan-African e-commerce company Jumia. Both work together to develop fintech services in the Jumia customer network.