Interswitch has a rare opportunity to make Verve an absolute dominant card brand in Nigeria. Yes, the inflation, forex paralysis, etc provide a huge equilibrium shift in the nation that I do not think makes sense for banks and fintechs to continue the issuance of Mastercard and Visa cards at scale.
Simply, why do you need a Visa or Mastercard card when you do not have a Nigerian passport to travel outside the country? And if you do, that card is not likely going to work outside Nigeria due to many controls. So, practically, for a bank or a fintech to be paying Visa and Mastercard hefty fees, shows lack of cost management. I do not see any strategic value in issuing Visa and Mastercard cards in Nigeria right now. You’re just wasting money for really nothing when Verve is there.
Interswitch Verve in my model will gain market share and if the economy continues the way it is, it can reach 70% of market share by 2025 (we hope Nigeria returns to real growth and opportunity of course).
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And the last word: Interswith can use this window to go IPO because I expect the Verve growth to accelerate, and if that is the case, it can solidify its position by partnering with companies like Evea to offer Verve credit cards. This is the Verve decade and it must take it!
(And if Interswitch does not want to IPO, it can unbundle and IPO Verve alone. That business is a category king. Of course, I do see a softening on the card business in Nigeria due to fees. Merchants do not like those fees. That said, the best part of card business is a credit era which is just around the corner with the CrediCorp. It is easier to use a card to issue those credits than using bank accounts; Verve has a promise there).
The Nigeria Consumer Credit Corporation (CrediCorp) is a company owned by the Federal Government of Nigeria. CrediCorp has one mission: to accelerate consumer credit access to 50% of working Nigerians by 2030. CrediCorp achieves this mission by:
A) fixing the structural barriers to accessing consumer credit in Nigeria.
B) catalysing the market with capital, guarantees, and policy.
CrediCorp including its consumer credit guarantee fund, works closely with the Central Bank of Nigeria, the financial sector, identity management, credit registries, fintechs, consumer protection, and policy makers on this mission.
The CrediCorp business is focused on the following:
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Strengthening Nigeria’s credit reporting systems, ensuring every economically active citizen has a dependable credit score. This score becomes personal equity they build, facilitating access to consumer credit.
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Offering credit guarantees and wholesale lending to financial institutions dedicated to broadening consumer credit access today.
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Promoting responsible consumer credit as a pathway to an improved quality of life, fostering a cultural shift towards growth and financial responsibility.
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Interswitch has a strong business case to advance there, while boards of banks and other financial institutions will start summoning top management to justify why Mastercard and Visa cards should not be discontinued. Some things just keep running like automation, even when no business case still supports them.
As for advancing credit economy, we will also need to disincentivise most of cash based transactions, they dilute any effort to formalize this economy to some reasonable extent. This chaos we call Nigerian economy has not helped the majority, so an overhaul is due.
Anything that creates good paying jobs must be prioritized, you don’t talk about strong economy when people earn pennies.