Nigeria’s e-commerce space booms as Interswitch, Unified Payment prepare to launch

The e-commerce space in Nigeria is poised for more competition as two switching platforms in Nigeria, Interswitch and Unified Payment are in the process of completing the launch of their online shops in a matter of months, BusinessDay can report.

For Unified Payment, the e-commerce vertical is the next phase of its business expansion following the launch of its Payment Service Bank (PSB) Hope PSBank to give banking access to millions of Nigerians including, especially those who are unbanked.

A spokesperson for Unified Payment told BusinessDay on Monday that the new platform will come on stream in the first quarter of 2021 in addition to the existing one. The company has been running an e-commerce platform on a small scale.

Interswitch is also expected to launch its platform in about two months’ time, according to a source close to the matter.

BusinessDay also learnt that the two switching companies are talking to Dellyman, a logistics company, to ensure customers get same-day delivery services from day one.

Their imminent entrance will swell the number of financial technology companies that are newly playing in the market already dominated by the likes of Jumia. Jumia, the only e-commerce player listed on the US Stock exchange is also planning to expand its share of the market after it raised $243 million by selling 7.9 million shares at an average price of $30.51 in December.

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Apart from Jumia’s raise, 2020 has been a busy and eventful year for the e-commerce space in Nigeria.

Payment gateway companies Paystack and Flutterwave joined the market in the second quarter of 2020.

Flutterwave Store notched up 1,000 sign-ups in the first 30 days. The figure has since grown to 5,000 by July and crossed 17,000 as of the end of November.

“Now we have businesses making over 1,000 orders in 3 days using Flutterwave Store,” Gbenga Agboola, CEO of Flutterwave said.

Statista estimates that the e-commerce market in Nigeria has grown by over 41.8 percent year-on-year in 2020 to reach $4.9 billion. User adoption is expected to grow from 52.4 percent in 2019 to 122.5 percent in 2025.

While Jumia controls about 70 percent of the market, it has not had the best year. Prior to the outbreak of the COVID-19, the company had started to trim down its operations across the continent. It had shut down operations in about three African countries and its stocks were not doing any better.

Although Jumia is starting to recover and could recoup some of the losses with the new funding, its top position faces a test with the entrance of Interswitch.

Interswitch became Africa’s first unicorn in 2019 after a $200 million equity stake by global card payment company, Visa which now owns 20 percent of the switching company.

Interswitch also sells its products in 23 African countries and launched a partnership in August for its Verve cardholders to make payments on Discover’s global network. The company has been delaying an IPO listing since 2016 which analysts expect to project valuation above the $1 billion range and give it unlimited resources to further expand its card business across emerging markets.

Being the payment switching platform of choice for many banks in Nigeria could give it an advantage over Jumia and its card business Verve which millions of Nigerians already use would come as an easy plug to solving payment friction that online shoppers experience.

Unified Payment will look to leverage its PSB licence to vie for a share of the market. The company is one of only three companies that were granted a PSB licence by the CBN earlier in the year.

The e-commerce market in Nigeria has however for years performed below expectations leading to the shut down of operators OLX, Gloo, OPay, Dealdey, among others. Konga struggled for years and had to sell to an investor, Zinox, for cheap.

Some of the challenges facing the sector include poor internet connectivity, expensive data, delivery, and logistics problems among others.

By enlisting Dellyman as their logistic plug, Interswitch and Unified Payment will be sending a strong signal to other players in the market.