“In 2023, we moved from negative to positive gross profit, and we want to be profitable by the end of the year,” Abdul Hassan, founder & CEO of Mono, told TechCabal. The startup expects to achieve profitability by scaling the adoption of its open finance tools. “We have more partnerships like this in the pipeline.”

The startup, like its competitors, has been expanding its focus from providing lenders with open banking APIs to servicing a wide range of fintechs to increase revenue. 

Before partnering with Mastercard, it had partnered with Flutterwave, one of Nigeria’s largest payment providers, to enable merchants to receive payment through the account-to-account (A2A) option which it calls DirectPay Pay with Bank. According to Mono, this payment option has facilitated payment transactions exceeding ₦5 billion since it launched in 2022. Mono can expect to facilitate even more volume as the Mastercard Payment Gateway System services numerous merchants across several African countries, including Kenya, Ghana, South Africa and Nigeria, where Mono currently operates.

On the other hand, this partnership is advantageous for Mastercard, as it has been finding new ways to digitalise spending. Through partnerships with payment providers, Mastercard has been exploring non-card payments in Africa for years: mobile money wallets, contactless payments, and QR payments. Around 2020,  over 1 million merchant locations across Africa were accepting  Mastercard QR payments.

”In three years, cards will mostly be used for offline payments,” said Hassan, who claims that Mono has connected more than 3 million financial accounts across Nigeria, Ghana and Kenya. He predicts that this account-to-account payment method will see even quicker adoption, especially in Nigeria, where  QR payments and contactless payments have slower uptake rates.

This optimistic outlook might be a breath of fresh air for established card networks like Mastercard and Visa, whose deployment of account-to-account payment in developed markets like the US and UK has met reluctance from users. Experts believe the consumer market in those regions favours the familiarity and ease of card payments for everyday spending and argue that users might require more incentives to adopt A2A options.

In contrast, in Nigeria, a lot of merchants are enabling the pay with bank option, which is repeatedly used even when there are USSD and card options, according to Hassan. “I think it is because of the ease and perceived security.”  Also, the settlement is instant and much faster than cards.

Hassan reasons that the success of this payment method for Mastercard spells good tidings for Mono’s dream to become a household name. 

“We currently have a web-based app that allows users to see how many fintech apps their bank details are linked to.” The four-year-old startup hopes to gain familiarity with the larger consumer market and eventually launch the web app as a mobile app with added features.

Payment processor Mastercard Inc. has agreed to buy a minority stake in the fintech business of MTN Group Ltd., a major telecom company in Africa. MTN’s CEO, Ralph Mupita, says that they’re finalising the investment arrangements, as reported by Bloomberg. The cornerstone of MTN’s fintech endeavours is its mobile money product, MoMo, which has been valued at $5.2 billion, nearly 40% of MTN’s total market capitalisation. 

This follows Mastercard’s $100 million investment in Airtel Mobile Commerce BV, the holding company for Airtel Africa’s mobile money operations. With the investment, Mastercard bought a minority stake in the fintech arm of the telecom, just like it is set to do in MTN.

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Mastercard has previously connected its virtual payment service to MTN wallets, enabling MTN customers to make international payments online without needing a bank account. This puts MTN in competition with established fintech companies such as Flutterwave, and other major telecom contenders like Airtel Africa Plc, Safaricom Plc, and Vodacom Group Ltd. have also ventured into the fintech sector.

MTN had previously shared plans to raise around $1.3 billion by selling assets. These plans include recent actions like selling and leasing back assets in West Africa and South Africa. This involves things like mobile-phone towers and their share in IHS Holding Ltd., a tower company listed in New York. However, the sale of this share has been postponed due to a disagreement with the management of IHS Holding.

Mastercard, a leading global payment services provider, has partnered with SomBank, a Sharia-compliant bank in Somalia, to launch the SomBank Card, a Mastercard-branded debit card. The collaboration aims to enhance financial inclusion in Somalia by providing customers with access to digital payment options. In the initial phase of the partnership, 100,000 SomBank customers will receive the SomBank Card in 2023, with the potential for further expansion in subsequent years.

By offering digital payment services, this collaboration seeks to address the growing demand for convenient and secure transactions in Somalia. Customers will be able to make purchases, withdrawals, and online payments using the SomBank Card at Mastercard-accepted merchants and ATMs. The partnership represents a significant step towards improving financial access and empowering more Somalis to participate in the digital economy.

“As a global technology company with a deep commitment to financial inclusion, Mastercard is proud to partner with SomBank to bring digital payments to Somalia. This also supports our commitment to work with financial institutions to bring more people into the digital economy,” said Shehryar Ali, Country Manager for East Africa at Mastercard. “By providing access to secure and convenient payment solutions, we believe that this partnership will help drive economic growth and improve the lives of millions of Somalis.”

This strategic collaboration aligns with Mastercard’s broader strategy to expand its presence in regions with strong digital growth potential. Somalia, with its increasing (yet low)  internet penetration and smartphone usage, offers a promising landscape for digital development. In 2021, Mastercard entered into partnerships with MyBank and Premier Bank in Somalia to further promote the digitalization of financial services.

The Mastercard-SomBank partnership marks an important milestone in Somalia’s journey towards financial inclusion. The introduction of the SomBank Card will offer a convenient payment solution for everyday transactions and provide access to essential financial services. As digital payment solutions become more accessible, the collaboration aims to drive economic growth and empower more Somalis to participate fully in the economy.

With the launch of the SomBank Card, Mastercard and SomBank are working together to accelerate the adoption of digital payments in Somalia, bringing the benefits of secure and convenient transactions to individuals and businesses alike. This partnership represents a significant stride towards a more inclusive and digitized financial ecosystem in Somalia.

“This is a truly remarkable day for us, as we take another step towards making banking more accessible for our customers. We are excited to partner with Mastercard to bring digital payment solutions to our customers,” said Abdullahi Aden, CEO of SomBank. 

Somalia has been trying to rebuild its digital payments rails since most of its financial institutions crumbled in the aftermath of its 1991 wars. In June 2022, Techcabal reported the national launch of SOMQR, a standard QR code for the country. The move was criticised by several industry watchers, who cited the country’s low internet and smartphone penetration. For these experts, the bet should be on cards—exactly what Mastercard and SomBank are driving with their latest partnership. 

Following the $1.2 billion chargeback fraud fiasco which saw the startup halting operations for eleven months, Zambian fintech Union54 is back with another product: a superapp called ChitChat.

ChitChat is a collaborative effort between Union54 and global payments technology company Mastercard and will enable users across Africa to send messages over an encrypted platform. ChitChat will also double as a  social commerce platform, enabling users to send each other money, access a USD debit card, and purchase from digital storefronts within the app. ChitChat’s card and payments features, supported by Mastercard integration, will roll out in a beta for Angola, Tanzania, and Ghana with more markets to be added this year. 

“We are excited to announce our ChitChat product and at the same time, announce our expanded partnership with Mastercard,” said Perseus Mlambo, CEO of Union54. “We believe that mobile payments and chat platforms can be a powerful force for increasing trade across Africa, and we are committed to building a platform that accelerates this. We’ve built payments into a chat platform, giving everyone a USD card on demand – on our terms.”

Union54 and Mastercard claim to have issued over 2 million cards to Africans through their partnership. 

“We are delighted to deepen our partnership with Union54 as we work towards creating a world beyond cash. Our collaboration will not only enable us to expand our reach into new markets, but it will also provide consumers with a secure and convenient way to access financial services,” said Gabriel Swanepoel, country manager at Mastercard, southern Africa.

In July 2022, Union54 halted its services following an attempted $1.2 billion chargeback fraud which saw many African startups that previously used its card-issuing services rush to find alternatives. In an interview with TechCrunch in March this year, Mlambo stated that Union54 intended to use lessons from the event and their subsequent hiatus to re-enter the African fintech market, a promise which has culminated in the launch of ChitChat.

According to the CBN governor, Godwin Emefiele, this move will drive financial inclusion and concentrate card financial data in Nigeria, even as it serves as a symbol of national pride for its adopters. 

“The national domestic card avails us the sovereignty of our data. Secondly, it comes at lower costs, ” he said.

With the annual value of card transactions in the Nigeria cards and payments market capped at $18.2 billion in 2021, Nigeria remains a huge market for players in the card payments market, which is largely dominated by global players like Mastercard and Visa, with Verve by Interswitch following behind. 

These global companies provide central payment networks which they link to debit and credit cards to enable and facilitate cash transactions with the card. The cards can then be issued to customers by banks, financial institutions, or even shopping malls.

By breaking the triopoly and establishing a national card payment scheme, the CBN, in partnership with the Nigeria Inter-Bank Settlement System (NIBSS), is positioning itself to disrupt and possibly dominate a fast-growing market. The CBN cites reduced operating costs and optimised foreign exchange usage as the hallmarks of its latest fintech foray. 

“At this time when foreign exchange challenges persist globally, it is important for me to say that we have come up with this card to ensure that all online card transactions will now, effective immediately, begin to go on the nigerian national domestic system,” Emefiele said.

“NIBSS and CBN will work together to make sure foreign exchange is charged for only international transactions made on Visa and Mastercards as we have it now. This is so because many of the cards we use currently charge in foreign currency. However, with the launch of the national domestic card, all domestic transactions are to be carried out on the national domestic card scheme,” he added, speaking further on the payment of forex.

Notably, this “homegrown” scheme is the first of its kind in Africa, but it’s a route common to some top economies like China, India, Brazil, and Turkey. In India, Rupay, the government-backed card payment scheme, dominates the card market, owing to its efficiency, relatively low cost, and policy backing. To date, more than 600 million Rupay cards have been issued.

Mr. Premier Oiwoh, the managing director/CEO of the NIBSS, noted that the scheme was developed to address the specific pain points of Nigeria’s payment industry and provide customised innovative offerings.

If this scheme records the successes of Rupay, then Nigerians will be able to pay lesser amounts for debit cards and the likes. But the question of reliability and interoperability can only be truly answered when the cards enter circulation. 

Speaking on how this move could stifle competition from global players, Emefiele said, “The Nigerian market is vast and the current participants have done so much in the last 12 years to transform the ecosystem. Yet there is much ground to cover as millions of Nigerians are still without cards to consummate transactions.”

“I am convinced that the national domestic card scheme will make this a reality in the coming months. We can no longer neglect the vast majority of Nigerians,” he added.

AfriGOpay Financial Services Limited (AFSL), a NIBSS-affiliated organisation, is responsible for deploying and overseeing the adoption of the national domestic card scheme.

On Wednesday, 15 January, Visa announced it was acquiring Plaid for $5.3 billion. Plaid is a US-based fintech that develops financial services APIs, similar to what Nigeria’s Flutterwave and Paystack are doing. But rather than process payments, Plaid APIs help other developers connect to customers’ bank accounts. It operates in the US and some European countries where banking APIs are more robust.

Plaid is an aggregator. It is connected to over 11,000 financial institutions making sure that users’ banking information can easily be connected from any Plaid-powered app. It doesn’t sell user data. It makes its revenue by selling licences to other companies and developers.

Visa sees Plaid as a valuable company; a must-have. The startup was valued at $2.65 billion in 2019, but Visa is comfortable to pay 2x that amount just to keep it all for itself. FYI, Mastercard also invested in Plaid in 2018.

While the Visa deal might seem like a one-off, it is part of a massive wave of deal-making that has happened in the global fintech space in the last few years.

The deal-making season started with Mastercard’s $920 million acquisition of VocaLink in 2016. VocaLink is a heavyweight in the financial systems of the UK, Singapore and Thailand. It processes over 90% of salary payments in the UK and billions of other transactions worth trillions of dollars.

Following the deal, other fintech companies have made serious moves.

Ant Financial, a fintech company owned by Alibaba, acquired the UK-based WorldFirst for $700 million in February 2019. In July 2019, America’s Fidelity National Information Services Inc (FIS) acquired payments company, Worldpay for $35 billion.

Visa made a move of its own. In May 2019, it acquired Earthport, a company that provides cross-border payment services for banks. And in July 2019, Visa snapped up another company. It acquired PayWorks, a German payments company developing POS technology.

Months later, Mastercard battled a number of companies for control of Nets, a European payments company. It ultimately acquired the company for $3.2 billion in August 2019.

Visa’s Plaid acquisition on January 15 only builds this trend.

Iyin Aboyeji, co-founder and former CEO of Flutterwave told TechCabal that the buying spree is expected. “Mastercard had bought VocaLink which is the UK version of Plaid. Anybody would have seen that they [Visa and others] are going to look for an American [or other] buy,” he said. “It was only a matter of time.”

These are heavy deals. According to one report, the total value of mergers and acquisitions in the fintech space was $116.6 billion in the first half of 2019 alone, up from $31.8 billion in 2018. Fintech giants are also making key investments in startups in different markets.

And these companies are only just getting started. PayPal will spend “$3 billion each year on acquisitions going forward”, said its CEO Dan Schulman in 2018. In the third quarter of 2019, it spent over $4 billion to acquire browser extension, Honey and a 70% stake in Chinese company GoPay. With the GoPay acquisition, TechCrunch reported that PayPal became the first foreign payment platform to provide digital payments in China, a $30 trillion market.

But what does this have to do with Nigeria’s two leading fintech startups?

Flutterwave and Paystack are two of Nigeria’s and Africa’s biggest names in the fintech industry. Within the last five years, both companies have disrupted the space. They’ve succeeded in crashing the cost of processing payments in Nigeria and are developing APIs that are making it easier for smaller players to develop innovative financial services.

Like Plaid, Flutterwave and Paystack have developed APIs for identity verification, checking of account balances, automating bank transfers, among many things. Both power companies of different sizes ranging from Uber, CowryWise, Wallet.ng among others.

Following Visa’s $5.3 billion Plaid acquisition, the Plaid’s CEO Zach Perret disclosed that they got to know Visa through its “initial strategic investment.” It served as a “jumping-off point for a series of conversations” leading up to the deal, he told CNBC.

Unlike their counterparts abroad, Paystack and Flutterwave have not raised “very huge” rounds. Paystack has raised $11.7 million. While Flutterwave recently completed a $35 million Series B round bringing its total funding to $55 million.

Yet, the two companies have scored major backing from important investors including venture firms and fintech giants. These deals represent significant validation and support for both companies, and they are also “strategic investments” from the world’s elite fintechs.

Paystack is backed by Visa, Stripe and Tencent which owns Chinese superapp, WeChat. Equally, Visa and Mastercard have invested in Flutterwave. Flutterwave has also secured an important partnership with Alipay. And with its latest funding round, American payment company, FIS, became a Flutterwave investor and partner.

In simple terms, what does this mean?

It means big companies are encircling Flutterwave and Paystack. As investors, these big companies could have privileged information about the growth levels at these startups. With enough information, it is easier for these strategic investors to make a decision about what company to acquire.

In the case of Plaid, Visa paid $5.3 billion, exactly two times Plaid’s book value. Some analysts believe this was no coincidence.

Since the start of the year, a number of insiders are predicting that a major Nigerian fintech could be acquired in 2020.

This prediction sounds plausible for a few reasons.

First, the African market, especially Nigeria, is making an important transition from cash and card payments to digital payments. Data from the Nigeria Inter-bank Settlement Scheme (NIBSS) shows that the volume of digital payments grew 494% in 2019.

The biggest growth came in December 2019 when Nigerians transferred ₦149 billion using their mobile devices, up from ₦28.14 billion in December 2018. This is good news for companies like Paystack and Flutterwave who process online payments for thousands of Nigerian and international companies.

The rapid adoption of mobile transactions could make plastic cards obsolete. Meanwhile, this could reduce business opportunities for card companies like Visa and Mastercard.

A second reason has to do with the fact that Africa is a frontier market and Nigeria is an important part of it. The Nigerian financial market is growing as different companies including banks and fintechs push financial services to more people. As these services continue to penetrate the market, financial enablers like SystemSpecs, Interswitch, Flutterwave and Paystack become important. So it’s no surprise that last year Visa acquired a 20% stake in Interswitch worth $200 million.

For fintech giants, Flutterwave and Paystack are more attractive. They are young, agile and are growing fast, both geographically and with their transaction volumes.

The consolidation in the global fintech industry could create an urgency for more acquisitions. Companies like FIS and Alipay are hungry for new growth opportunities. While Visa and Mastercard want to remain relevant in the post-card-world of Africa.

Would an acquisition happen anytime soon? We don’t know. But what is clear is that consolidation is ongoing in the fintech world and big companies may have Paystack and Flutterwave on their acquisition list.

But it’s not only these two companies that look like acquisition targets at the moment. Iyin Aboyeji believes companies like OPay and PalmPay, a service owned by Chinese companies Transsion Holdings and NetEase, are disruptors that could be acquired by big players. True to this, OPay has attracted big money investments from SoftBank, Sequoia Capital and ByteDance the company behind TikTok.