10 Predictions for Digital Payments in 2021

Now for the fourth year, here are my predictions for digital payments in 2021 with the hope that it offers a better time for everyone than 2020. You probably have heard it a thousand times; 2020 was a shitty year for almost everyone except for technology and especially payments.

Those worst hit by 2020, apart from the folks who lost their lives (may their soul rest in peace even if I don’t believe in the afterlife), are pundits like me whose predictions were thoroughly trashed.

But despite this, we all still look forward to these fintech predictions for 2021; who am I not to serve you a hot dose of fiction wrapped as facts?

Let’s do it!

#1 Visa buys Interswitch for $800m

Earlier last year, before Covid spanked everyone, I laid out an argument that Visa could buy Interswitch. Despite the global pandemic and its attendant economic fallouts in Nigeria, the thought has only become stronger in my head. The reason is that Interswitch has a knack for announcing its massive valuation, just as Naira wants to go bananas. Unlike what everyone believes, Mitchell Elegbe doesn’t own Interswitch; the real owners, knowing that the Switch is hooked to a downward sliding Naira, would be hitching for a payday. Visa, forever married to Nigerian transactions, already owns 20% of the Switch; Naira is now so cheap (if you earn in USD). Plus, the fundamentals of Interswitch are still pretty strong, while not buy it on promo?

#2 Mastercard buys Etranzact

Only a fool would let its most significant competitor decide its fate. If Visa bought Interswitch, and Interswitch runs nearly 100% of Mastercard’s transactions in Nigeria. You can be sure the not-so-foolish humans of Mastercard would probably take their traffic somewhere else. Only Etranzact fits the profile of a replacement due to its basket of licenses.

Disclosure: I own a bunch of Etranzact shares. If this pans out, I’m gonna buy a Maserati.

#3 CBN caves in as MTN gets a PSB license

I made this call last year and I will make it again as part of my predictions for digital payments in 2021. This is a carryover prediction from last year. With Karl Toriola running MTN from March 1, 2021, you can be sure as hell that he will do something as he has a track record of performance, and banking has a track record of minting cash. Marry performance to sashe, and you can be sure as hell that MTN won’t give up until they get this license.

#4 Agent locations surpass 1m

I made the right call last year that agency banking will explode. Despite the Covid pandemic, agency banking grew like wildfire. Opay, which ran into a brick wall with all the other tech services, finally hit paydirt with agency banking doing $1.4b worth of transactions a month. Teamapt is almost pivoting to this as well; fancy fintech be damned. Unofficial numbers of locations hit 530K last year;. At the same time, SANEF seems a bit quiet about a target; I’m sure the market will drag this over to 1m locations before the end of the year.

#5 Interbank transactions cross half a billion a month

I made the call for our Nigerian faster payments to hit 300m per month. I don’t yet know (as of this writing) the number for December, but sweet November saw the industry moving N17t worth of cash over 224m transactions. The pace will continue, and it will cross the 500m transactions per month around August 2021.

#6 Free interbank transfers go mainstream

Kuda made noise about this (and it seems to be working), and Sparkle is now leading the charge. But guess what, a major bank (think Access, GTBank, or Sterling but not UBA) will decide that, hey, let’s blow this sh*t out of the water and make interbank transfers below a certain amount, say N5K, free. Such a move has excellent optics, and most importantly, it’s the singularly free feature nobody can abuse. Think!

#7 Agency banking becomes the last mile for fintechs

Agency banking is messy as hell; you don’t even find them on Twitter or the ‘gram. But who cares? Once the boys of Opay, Capricorn Digital, Teamapt, and others found success, the next is for them to layer a patina of APIs on these connections, and it becomes the real last mile for digital payments. If agents are fully KYCed and have constant location-aware devices, then the physical can meet online for loans, KYC verification-as-a-service, e-commerce deliveries, transfers-to-cash from banks, etc.

#8 Virtual accounts come of age

Some people I know have been cooking virtual accounts for years, but Teamapt, ever the innovation and executioner, quickly brought Providus to the limelight. Now others like Rubies, Zenith, Sterling, Wema, and our Woven + Sparkle are now on the game. Virtual account (vNUBAN) is a little clunky but significantly superior and a more inclusive payment within the Nigerian context than cards. It’s the only payment method that works across all channels. I expect this to blow cards out of the water, although I said the same thing last year, and it didn’t happen.🙈

Disclosure: My company, Trium, owns Woven and a significant investor in Sparkle.

#9 Local investors step to the plate

With practically everyone I know beating themselves up for missing out on the Paystack investment train when it came calling years ago, those with some cash are now seeking out future Shola Akinlades to invests in. The percentage of investment by local investors will grow to be at least 30% this year. But please be warned, dear investor, angel investment is not for the impatient and the weak of heart. Dear founder, not every cash you see is good for your cap table.

Disclosure: I’m a director at Paystack, and nope, my call last year wasn’t a piece of insider information; and thanks, Shola, for making a good example of Nigerians

#10 WhatsApp makes a payment play in Nigeria

With Stripe leading the charge to dip a toe in Nigeria, and it counts Facebook as part of its customers, WhatsApp could expedite its move into payments in Nigeria. All it needs to do is slap a virtual account behind every WhatsApp profile, and the rest is history.

#11 The one prediction 100% to come true

I always say this, and I would say it again: All of these predictions for digital payments in 2021, are at best, educated guesses at what could happen, which isn’t better than a bunch of bananas trying to eat a monkey.

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