What Interswitch Brings to Bankom, Uganda Payment Market

script: sola fanawopo
 

The news of Interswitch Limited, a Nigerian-based electronic transaction and payment solution provider, acquisition of a 60% stake in Bankom Limited, the Ugandan interbank switch operator came to industry watchers as a surprise.

Most analysts expected the hugely successful Nigeria “Super Switch” to first pursue growth in the more lucrative West African region as did Nigerian banks before venturing to other region. No one thought that the company will first target Uganda, the backwater of East African economic block.

However, the deal can be said to be another practical step by Nigeria to dominate financial services industry in Africa. Perhaps, Interswitch is ready to emulate the phenomenal growth of Nigerian banks such as UBA Group, Zenith Bank, Access Bank, GTBank and Intercontinental Bank across Africa.

Meanwhile so many questions came to one’s mind while analyzing the deal. What really attracts Interswitch to Bankom? A company that has not returned substantial profit to its investors after seven years of operations, and what will Interswitch bring to Bankom and Uganda market that Bankom has not tried before, considering the fact that they both operate on Postilion platforms?

Three things come to the fore while looking at Bankom’s value propositions. Number one: Interswitch must have considered the fact that Bankom operates on Postilion software, an application that Interswitch has applied very well in its operations in Nigeria. Number two, is the fact that Bankom has a monopoly status in Uganda.

Uganda’s Central Bank awarded the license to Bankom in 2002 to exclusively operate Uganda’s sole Inter-bank switch. Successful companies like monopoly status and Interswitch is not an exception. Number three, the company might want to use Uganda as a decoy gateway to enter the East African market.

As for what Interswitch will bring to Bankom, Ugandan and by extension East African market, it would not be too hasty to declare that its entry will bring more innovations, purposefulness and the required urgency into the market.

If its success in Nigerian market could be used as a yardstick, Ugandan banks, governments, retailers, corporations, and bank customers would soon feel the power of Interswitch. In terms of products and services, the company has over 25 products on its shelf list. All Nigerian banks are connected to the switch and that is why it is called 100% switch. 27 states out of 35 states that made up of Nigeria federation used Interswitch’s collection solution to power their tax collections. All the ATMs (10,000) in the country are connected to its switch.

Over 350 merchants, ranging from airline, bookshops, and supermarkets powered their e-commerce sites, using Interswitch network. Bill payments such as electricity, water, DSTV are done on the platform as well. In addition, most significantly, the company has just completed the shortest, the cheapest and most innovative cut-over from magnetic stripe to chip & PIN EMV platform implementation in the world.

Not only did the company help its bank members to manage the implementations and transition without much ado, the company introduced the first African branded EMV payment card called Verve. 17 of the 24 banks in Nigeria have issued over 12 million Verve cards to their customers.

Therefore, Interswitch brings to the East African market a rare expertise in the end-to-end management of migration from magnetic stripe to smart card EMV platform. No other payment firm in Africa can boast of such credentials.

However, Interswitch has the cultural angle of the business to contend with, considering the fact that Uganda businesses are much more conservative compare to Nigeria aggressiveness. However, the retention of Dr. William Kalema and Charlotte Kaheru as Bankom chairman and managing director respectively is a sign that the company is ready to play the cultural game as well.