NIGERIA – African fintech firms are increasingly becoming an attractive investment destination for global payment companies.

The fundamental importance of the services that fintech companies provide underlines why the sector holds long-term appeal for global payment companies such as Visa, PayPal and MasterCard.

Fintech firms offer a wide range of financial services including; powering payments, facilitating savings and ensuring financial inclusion for the unbanked to tackling access to credit for small businesses and individuals.

The move by visa to pay $200 million for a 20% stake in Nigeria’s Interswitch is the latest in a string of moves by global payments companies backing African fintech companies and seeking high-growth bets in emerging markets.

Visa’s investment in Interswitch changes the fintech landscape “significantly” and confirms the strategic interest of global payment giants in Africa’s financial services industry says, Victor Asemota, a veteran tech investor.

“We were once talking about validation but we have moved way past that now to strategic positioning by major players. It is no longer a case of “let’s see where this is going.” It is now a case of jumping on the bandwagon.”

Interswitch by most metrics, represents significant value proposition given its established strength as an early-day and major player in financial technology with operations in over 20 African countries.

While Visa’s stake purchase would confirm Interswitch’s unicorn status, the company was reportedly set to be valued at as much as $1.5 billion ahead of a planned IPO in 2020.

Other African fintech firms which have attracted considerable backing from global payment companies include Paystack which received Visa and Stripe backing in 2018, Flutterwave which was backed by Mastercard in 2018, Tala which is backed by PayPal and Branch loan app which has a Visa backing.

Interswitch is Nigeria’s largest electronic payments company and is the second Africa- focused tech company to achieve the billion-dollar so-called unicorn status after Jumia, the e-commerce company which received its unicorn status and was listed for over $1.4 billion in April.

The company’s services range from powering online payment platforms and point-of-sale terminals to a debit card network with 19 million active cards.

Interswitch has engaged itself in acquisitions to diversify its financial offerings. It recently bought a majority stake in e-Clat Healthcare, a health-tech company to add to portfolio which comprises of VANSO, a financial services startup, in 2016 and Paynet, an East Africa-focused payments provider where Interswitch has a controlling stake.