The Nigerian company Interswitch is to launch its Verve payments cards in Kenya, a move that should cut banks’ costs and threaten the dominant positions of Visa, MasterCard and the M-pesa mobile money service.
Charles Ifedi, Verve’s chief executive, said fees charged by Verve in Nigeria were between 30 per cent and 50 per cent less than those charged by Visa and MasterCard, with savings on some services, such as buying mobile phone airtime, of up to 300 per cent.
It is Interswitch’s auxiliary services, such as its Quickteller platform to pay bills and top-up airtime, that are likely to have the greatest impact on Safaricom, Kenya’s largest mobile operator, which operates M-pesa.
M-pesa is used by about 70 per cent of Kenya’s adult population to make five times as many monthly transactions as credit and debit cards combined.
The Verve debit cards are set to be introduced in Kenya early next year, with three banks — including two of the bigger ones — already signed up. Customers will be encouraged to use their cards with offers of cash rewards for each transaction.
People without a bank account in Kenya, who account for some 33 per cent of the adult population, will be able to use Verve prepaid cards and top up their balances at agents.
However, Mitchell Elegbe, founder and group managing director of Interswitch, said his company was not in competition with Safaricom. “We’re more of a catalyst to speed up transactions rather than being involved in them ourselves,” he said. “We want to work with Safaircom as well as the banks.”
Mr Elegbe admitted that by introducing more Verve services, the goal was to make the cards “more sticky” so people would use them for increasingly varied transactions.
“Our aim is to make payments intuitive,” he said. “We don’t want you to have to think about the cost of a transaction when you make it.”
Launched in 2009 in Nigeria, Verve cards are used by about 45 per cent of the west African country’s 30m cardholders, Mr Elegbe said, adding that a further 16m people use its prepaid tokens or mobile payment apps.
The private company that is 60 per cent owned by Helios, the private equity firm, processes 4.2bn transactions worth $32bn a year in its three markets of Nigeria, the Gambia and Uganda.
Eric Musau, an analyst at Standard Investment Bank, said Verve’s entry would be “very interesting”. “The uptake of cards hasn’t been that strong in Kenya, there’s a phobia about them, and people still prefer to use their phones,” he said. “But if [Interswitch] can attract more banks and their systems work well technologically they will have something going for them.”
Mr Elegbe said his goal is to start operations in more east African countries and combine the company’s operations into one regional network.