Interswitch seeks PSB license following merger with M-Kudi

Interswitch, the Visa-backed Nigerian payments giant, has merged with M-Kudi, a mobile money provider, as it seeks a payment service bank (PSB) license from the Central Bank.

The merger, subject to regulatory approval, will allow Interswitch to create accounts and hold customer deposits, making it the first time the fintech would offer non-payment services. This follows the fintech’s acquisition of a mobile virtual telecoms licence.

“The PSB use case for these companies (payment companies) is the same: to keep some float of their transaction volumes in-house and consolidate on their already established strengths,” an industry insider told TechCabal.

“A PSB is the sensible consolidation for them (Interswitch) even if it means they bank themselves,” he added.

Interswitch declined to comment on any part of this story.

With the PSB licence, Interswitch, which brought in $42 million in revenue for its 2023 fiscal year that ended March 31, will be able to receive foreign currencies for its customers and directly offer agency banking services.

Nevertheless, Interswitch has to offer innovative services to convince Nigerians, famous for user inertia, to use its remittance or agency banking services. Interswitch’s tenured presence in Nigeria, where it derives 94% of its revenue, would be useful.

The CBN introduced regulations for payment service banks in 2018 with a remit to increase financial inclusion in rural. Those license holders are to offer 25% of physical activity in “rural areas with a high unbanked population.”

Interswitch, which derives most of its revenue from offering services to its banking customers, will have to invest in a nationwide physical network of agents.

Mobile money operators are also limited from participating in the revenue-driving segments of other banks, as they cannot directly give out loans, hold foreign currency deposits or participate in foreign exchange transactions except for receiving remittances. These restrictions severely affect the attractiveness of PSBs in Nigeria.

Get the best African tech newsletters in your inbox

ObadeYemi

Adeyemi is a certified performance digital marketing professional who is passionate about data-driven storytelling that does not only endear brands to their audiences but also ensures repeat sales. He has worked with businesses across FinTech, IT, Cloud Computing, Human Resources, Food & Beverages, Education, Medicine, Media, and Blockchain, some of which have achieved 80% increase in visibility, 186% increase in month on month sales and revenue.. His competences include Digital Strategy, Search Engine Optimization, Paid per Click Advertising, Data Visualization & Analytics, Lead Generation, Sales Growth and Content Marketing.

Share
Published by
ObadeYemi

Recent Posts

“We made zero revenue in our first three years”: Day 1-1,000 of Izesan!

Few founders dare to take on the challenge of preserving Africa’s linguistic heritage. Anthony Otaigbe…

13 hours ago

Fincra gets South African payments licence to deepen African reach

Fincra, a payment infrastructure provider that serves remittance companies and businesses, has obtained a Third…

2 days ago

Startups on Our Radar: 10 African startups rethinking ride-hailing, credits, and banking no one’s talking about yet

Startups on Our Radar is a bi-weekly column that spotlights new startups across Africa taking…

2 days ago

KPI dashboards & how to use them in your marketing

I’ll never forget the first time someone asked me for a marketing performance update. I…

2 days ago

Creating a B2B buyer journey map in 8 steps

When I started working with B2B companies, I quickly realized that understanding how your customers…

2 days ago

Forget Photoshop: Google AI Studio is the new editing powerhouse

Image editing used to mean opening Photoshop, wading through complex tools, and spending hours on…

3 days ago