We Hate Interswitch So Much That We’re Going To Disrupt Them

molue (1)

Just so we’re clear, I don’t actually hate Interswitch. That would be like the average Lagosian saying they hated Molues six years ago. There was nothing to hate, just a question of whether you wanted to commute or not. For most people in Lagos, it was either that Molue (pictured above), or you wouldn’t get to work. Of course we all know how well that particular dinosaur of Lagos transport has fared since Fashola introduced his fancy BRTs and dedicated bus routes.

I consider Interswitch similar to Molues in that they are both lumbering, rickety giants. But that is as far as the similarities go, because while Molues are actually cheap and provide lots of utility for the masses, compared to alternative means of transport, Interswitch products cost an arm and a leg, and are often crapware.

Which is why I couldn’t help letting out a loud guffaw when my attention was drawn to this article, which reports that Interswitch plans to make it easier and cheaper for small businesses to accept online payments by slashing the rates of connecting to its payment gateway. The word on the street is that this sort of connection costs NGN150,000. Interswitch is promising to bring it down to as low as NGN50,000, for SMEs. Let’s give them a round of applause, shall we?


50k, and they think they are doing local SMEs a favour? That is unmitigated BS, if you ask me. Especially when there are other companies offering the same service who not only do it better, but cheaper, with all sorts of value added toppings. Heck, some do it for free, making money only on transaction charge percentages or flat rates.

Take for instance, Eyowo, their basic plan costs NGN6,000 a year. I suspect they’ll have to review their rates soon, because of services like MiMo, which should launch to the public shortly. MiMo demoed their online and mobile payments product and API to the developer community at the Co-Creation Hub last week and I almost did a double take when they said there would be ZERO setup costs for the merchant-facing product. But ideally this should be a free service in the first place. Paga already offers a FREE online checkout service. I could cite more examples, but long story short — if I were an SME right now, I would tell Interswitch to take their product and shove it up, you know, somewhere.

Oh, I almost forgot to add that to qualify for this Interswitch bonanza, the intending SME is required to go through some convoluted registration process via the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). Wow, it’s that easy, really? And I guess the rest of us “non-SMEs” (because we aren’t registered with SMEDAN) are ineligible for Interswitch’s welfare package, we’ll just have to cough up the standard 150k if we want to accept payments online, no? And upon on top of that, the lucky SMEs who fall into the technophobe majority will still have to pay/beg/blackmail the unfriendly neighbourhood geek to help with the API integration. Lord have mercy.

Maybe I could have tolerated how the whole scheme drips with condescension if it weren’t much like a welfare shelter specifically designed to fleece the poor hobos who come in.

Just as the unruly Molues were indispensable to Lagos’ transport infrastructure, Interswitch’s emergence was a leap for the Nigerian tech and finance ecosystems, and as they grew, we were willing to tolerate their shortcomings as part of the process. But those benign shortcomings have since graduated into full-scale tyranny, ranging from stingy API policies, to extortionate pricing regimes, to plain old refusal to innovate.

But guess what? Life is too short to deal with difficult AND expensive online payment collection solutions, especially in Nigeria when you have other, myriad business hazards to worry about. This foreign analogy might not exactly run parallel to ours in factual respects, but the tyranny of a near ubiquitous online payments product gone bad is exactly why WePay is trying to kill the PayPal button, by making online payment acceptance as easy as embedding a YouTube video, literally. Already, the people who should know have begun to say why they think PayPal is on its way down. If Interswitch doesn’t watch itself, it’ll go down for largely the same reasons too.

I have come to the end of this rant, and all I have left to say to Interswitch is no problem, stay there and continue dulling. We all know where the few surviving Molues on Lagos roads are headed for. The scrap yard. Whenever Interswitch pulls shit like this, I can’t help wondering if that is where it wants to go too. It looks as though Nigerian e-commerce is just getting off the ground in earnest, but Nigerian merchants have been practically screaming for online payment solutions that aren’t designed to screw them over since 2009!.

Three years later, Nairaland geeks are still trying to make sense of Interswitch’s API. In fact, I already know what the title of my next post should be — five (or more) great Nigerian online payment services that totally kick Interswitch ass. Stay tuned.

And uh, Interswitch? Take a good look at the future and weep.

PS: If you think your online payments solution kicks ass, you should hit me up here, let’s talk.
PPS: Kehers has just pointed out to me that these other Interswitch “alternatives” also need to integrate with Interswitch. Now ain’t that a bitch?

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  • Ifeanyi Gbemudu

    Sadly the last innovation Interswitch had was the launch of Interswitch; every other thing is a shitload of BS.
    – Interswitch should be a platform provider like 2CO, GoogleCheckout, Paypal & co but no!!! they must compete with their merchants/developers for clients. I still don’t get that part.
    – I tried to launch a product about 5yrs ago that needed one of their products called CollegePay and it was N3.5m. That project just died.
    – Integration to 2CO is in a couple of hours maximum… Ha… try Interswitch. You won’t be done in a week.
    – Interswitch has also done nothing to grow the Eco System. Things like CCHub should be powered by Interswitch. Things like QuickTeller should be a merchant product and not theirs but NO… They must do everything.

    Interswitch is like the Nigerian government and we will soon OccupyInterswitch.
    Nobody, not even Apple or Google can mess with developers and win. YOU JUST CAN’T.

    iRest my rant for now.

  • Nelson

    @MrBankole 1. I agree with you that Interswitch has to make access to it’s services cheaper and make things less complicated.

    @MrBankole 2. Almost all Nigerian banks issue Interswitch cards and that’s a huge plus for them and the end users.

    @MrBankole3. In the area of security, I’ll put it this way, Verve I know, Visa I know, MasterCard I know, who are you? (other providers)

    @MrBankole 4. I agree with the areas you highlighted where they need to work on but they got a head start over the others and …

    5. In the nearest future, barring a catastrophe, I don’t see them being
    dethroned. At best others may resort to niche marketing.

    @MrBankole 6. In a Nigerian University, two payment options were made available to students Interswitch and etranzact. The students massively chose interswitch that etranzact option had to be scrapped.

    In conclusion, the people mostly complaining are people and Companies who cannot afford interswitch’s services and some of their complaints are justified.

    Any big business that is serious will definitely adopt Interswitch for online payment, look at their sites, more clients are being added daily, what does that tell you? The companies are happy, Interswitch is happy and I am happy that i can use my verve card from the comfort of my house. So are millions of Nigerians.

    End of Rant. :)

  • http://www.facebook.com/idowu.akinrelere Akinrelere Idowu Tolulope

    @3bfc1f641b86c47c70170888bae36c25:disqus ….The only reason why Students had to use Interswitch as the payments option is because their card (Which had been issued to them by their bank) is an interswitch card.
    The only leverage Interswitch has is that almost all banks still issue Interswitch cards.

  • adesanjo

    that is the leverage that others DONT have

  • http://twitter.com/tubiz Tunbosun Ayinla

    This is definitely true.
    I believe Interswitch as a company needs to get their act right else their end is near.

    Most of the recent payment gateway integrate with Interswitch.

    I think Eyowo, Voguepay and Cashenvoy integrate with Interswitch the only difference is that they are paying for the signup fee that users are to pay.
    Lets call them a reseller. ***Just joking though***

    Even though some banks offer payment gateway i don’t know how it works but two thats seems to be popular now are GTPay and ZenithBank GlobalPay.
    But seriously if I am to integrate a payment gateway for any project I will only accept Visa and Mastercard. I won’t accept Verve or what name do they call their card. *LOL*

    It seems a lot of banks are quietly doing away with Interswitch as well, most of the cards issued by banks are either Visa or Mastercard.

    To cut the story short their end is near.

  • http://www.facebook.com/people/Michael-Ebia/1155619942 Michael Ebia

    I normally don’t comment on issues like this but it’s critical that we don’t mislead the digital community and that’s why I have to do this; its even more critical as Loy is a personal friend.

    Firstly, I must say that this is one of the reasons developers and programmers are not wealthy and rich in this country. A powerful solution is made by our own tech guys and connected to a switch platform that has never failed once and we expect them to give it totally free or at peanuts to consumers? I don’t think its totally brillant. The other entrants in the market still need them because of how reliable the system is.

    Secondly, when articles like this are written I wonder if the business side of a technology firm is considered. I go to CCHub sometimes and I weep at how brillant and hardworking our tech guys are, full of smart ideas but lack business sense to convert them to products that will affect the critical mass. Please kindly go and compare the fees switching companies in Europe charge! There are business sides to every price, I boldly say that there are not more than 500 merchants that are subscribed actively in Nigeria. Also do not forget that a percentage also goes to the financial houses and regulatory bodies. Ask ‘Eyowo’, they would tell you it’s not been an easy ride. They wish the transactions could be more. Nigeria still haven’y gotten to a fraction of the transactions that occur with our overseas. The volume will sure drive the price down.

    Finally, please technology is not an easy ride. Please don’t price us cheap, we do better than the government. I am passionate about Digital media and want to see programmers, developers succeed at it. We should be wealthy because we provide structures and the platforms for economy development. In truth, any serious SME should be able to pull together N50,000 or so to get his office running, the web platform is like an international office. Interswitch has done no wrong. Prices will naturally fall with increase in demand.

    (Am sorry for the long epistle). Stay Digital. Cheers friends.

  • Anonymous

    This guy is definitely hungry and he is just looking for cheap popularity at the expense of other people’s hard work. For all I know he does not know the terrain he is writing about. Please go do some research before polluting the atmosphere with nonsense.

  • http://www.facebook.com/people/Michael-Ebia/1155619942 Michael Ebia

    Whosoever you are God Bless You! We need well informed and matured writers!

  • http://www.facebook.com/siji.ajayi Siji Ajayi

    Very interesting, entertaining and informative article. I’m going to have to agree with Michael Ebia. Interswitch could perhaps do better with their prices but that is pure economics; the more clients they have (resulting in more transactions), the cheaper the cost of their platform will be. What they absolutely need to do though is to seriously and rapidly overhaul their api thoroughly! Its a nightmare and that probably affects their bottom line in the long run. The easier it is for developers to use your api, the more deployments you’ll get.

  • Chike

    Hope you get to post this, reporting without getting all the necessary information is scam.

    You can easily collect payment on your site using Eyowo, CashEnvoy, GT Pay and so on which is much more cheaper than going through interswitch. There is a reason why interswitch charges are higher than these people, did you care to find out? You did not even point out to people that going through these Eyowo’s gives you access to Etranzact and Visa not just interswitch.

    This is just so much unbalanced, so much beef for Interswitch. If interswitch goes down today, how many interswitch staff would you employ??? Agreed there are issues about integration and the process around it, what are the suggestions you have to better this?
    Do your research well before posting stuffs, you are killing someone else’s business just to pull traffic to your site, what a shame!!!!

  • http://www.facebook.com/idowu.akinrelere Akinrelere Idowu Tolulope

    Now that Nigerian banks have started issuing visa and mastercards we would see where this so called leverage would take them

  • http://www.victorasemota.com/ Victor Asemota

    The problem with Interswitch is not Interswitch it is Nigerian banks, CBN, NIBSS, Valucard etc….. I can keep naming all the players who have been complacent and have not pushed the payments space to the very edge in Nigeria.

    Interswitch was primarily licensed as a switching company and NOT as an online payment gateway, a card issuing company or an acquirer but it has evolved to fill all those needs in a less than satisfactory way because the policies were flawed and the competitors were either dormant or playing by the book. The banks who were once shareholders who formed it abdicated all their responsibilities to create a monster child.

    Every Nigerian bank has the capability to be a payment gateway or a major issuer or acquirer but they choose to abdicate this responsibility to Interswitch with a few exceptions like the foreign owned banks and the really forward thinking local banks like Zenith or (sadly) GTBank.

    Interswitch has been successful no doubt even though its strategy was flawed and they have been able to push the envelope to the point where they almost owned the entire post office. On its way there the banks, CBN and other idle bystanders stood there waiting until they became the gatekeepers for all payment initiatives in Nigeria.

    The CBN has a lot of licenses for stored value providers, switching companies etc but how many people have had the vision or foresight to invest time and effort in doing the hard work to get these licenses and build something truly awesome from the ground? We all dont want to do the hard work but want to do the easy work on the web. Paypal grew not because of its web front end but because it fought hard to build relationships with banks and card associations.

    I doubt that any of the players on the web layer will do anything to dent Interswitch’s dominance in payments for now but they can give it a better more human and business friendly face by aggregating connections to it. Interswitch has always been better suited to be a backend switch and a payments aggregator and not a frontend solution so while we wait for the messaiah in switching (NIBSS) to wake up we should tolerate the molues or we take some danfos as well. The BRT for payments is not here yet.

  • Joe Arisekola

    Its unfortunate but I dont get your point. If this is your way of asking the company to help your broke ass to get a life….then i’m sorry, its pretty sad.
    I didnt know we had such retarded nigerians who disquise themselves in the name of being a “techy” as that word can be used by any fool in a glasses.
    My guy! Park well!!!
    Or else, u go use ATM and e go explode with u and ur card!!!

  • Ifeanyi Gbemudu

    Hi Asemota, you are totally well informed on this matter and by far the best contribution to this issue I’ve read. Where I got really ticked-off by Interswitch was when they started competing with their own merchants. As for NIBSS, CBN and the banks, we’ll keep watching.

  • http://twitter.com/wilkanah Williams Ilenikhena

    quote: ”
    But seriously if I am to integrate a payment gateway for any project I will only accept Visa and Mastercard. I won’t accept Verve or what name do they call their card. *LOL* “:end of quote… Seriously….? What’s the economic sense in that… or like the writer.. you’re writing out of your ass and your brain is otherwise…

  • http://twitter.com/wilkanah Williams Ilenikhena

    API’s should be easy… and integrable… so easy you do not have to be techy to use… that said… API’s have to be secure too…. But they do not have to be free!!! (companies will adopt business strategies as they see fit… its up to them in the end… don’t feel to badly if as an intending customer you do not agree…businesses exist for profit… that is the better model) the market
    should take care of the delicate balance of things… such that the customer has access… constantly… to better value (its more the market and less about regulation – cos in the end the regulators like this writer does not know the industry they’re regulating or writing about… so they kill things… even though in some cases they mean well…);

    Thankfully we cannot say it is a monopoly so yes Interswitch has to improve in certain areas… and…this write-up is far from balanced… Alas… Innovate… Innovate… Innovate… in the end… let the market determine!!!

  • Bayo

    My comment is based on my own perspective. As an active member of the web development community in Nigeria, i completely agree with this article. Those who disagree are probably not developers or work with interswitch.
    I agree that all the mentioned alternatives still integrate with interswitch one way or the other but the truth is that interswitch WEB payment business process is embarrassingly flawed. I/my company has discouraged over 100 Nigerians in the diaspora who have inquired about starting up online businesses in Nigeria and i have lost count of Nigerians based in Nigeria that i have discouraged. Maybe these individuals/companies i have turned down due to “interswitch issues” have gone to other developers to actualize their ambitions i do not know. The problem goes beyond the 150k cost but the solution is so simple and basic. If only interswitch will listen….

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  • Tinu

    Interswitch cards are already becoming obsolete. Interswitch has the license to the Mastercard API which is what they are leveraging on right now. This licence costs an arm and a leg to get but if another Innovative Nigerian company such as VoguePay, eTranzact or Eyowo can get this license, interswitch is doomed.

  • http://twitter.com/PaulEmekaEze Paul C. Eze

    Most sensible comment here so far. Most others either hurl insults at the writer or praise him to the high heavens for the piece. The online payment system in Nigeria is fraught with challenges and Interswitch shouldn’t just be crucified at the wave of a hand

  • http://twitter.com/PaulEmekaEze Paul C. Eze

    Willimas what negatives come with accepting Verve alongside Visa and Mastercard?

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  • http://www.facebook.com/people/Michael-Ebia/1155619942 Michael Ebia

    Warm Thanks Paul. Keep Believing! We will get there together!

  • http://www.facebook.com/people/Michael-Ebia/1155619942 Michael Ebia

    :). Easy Joe. Keep propagating the digital truth, only then can we truly build our industry! Keep working!

  • http://www.facebook.com/people/Michael-Ebia/1155619942 Michael Ebia

    “If interswitch goes down today, how many interswitch staff would you employ???” Brillant Question, Chike! Keep supporting tech. Let’s stay positive always!

  • http://twitter.com/TheRealPelumi P1!

    The only reply I have to you is to correct you that there is no platform that has never failed. #fact.

  • http://twitter.com/TheRealPelumi P1!

    I once drew flak from major players in the e-payment sub-sector because I stated that a certain mobile money provider can’t become the paypal of Nigeria. Truth is Interswitch has tried but then they have refused to evolve. 3 years ago, only big businesses were interested in having online payment integration but today, the average startup (usually founded by a young graduate) needs to integrate payment into his/her solution. Eyowo, Cash Envoy and the rest of them are trying but Interswitch needs to re-assess its position. The only reason why people are still tied to Interswitch is because our banks have refused to look for alternatives. I believe that with time, Interswitch will cease to become this important even though NIBSS’s MD said they will still rather work with them than anybody else.

    And oh, the other alternative will fare better if only they didn’t have to connect with Interswitch at the back end.

  • Sims

    No need for the abuse. Nigerians need to learn to calm down; he’s entitled to his opinion, and you’re entitled to politely tell him that he’s misinformed if that’s what you believe. So far as your name is not Interswitch, then he’s not abusing you. Too much gra gra on this thing; when we’re not talking about those in government stealing money.

  • deji

    Well…..interswitch processes mastercard…

  • deji

    Dear Writer,
    Sorry to announce to you that interswich is here to stay. They have way to much cash to be pushed out of the market. All this other guys with ‘sweet’ solutions have no connections to the banks and so at the backend, they still need a processor i.e. interswitch, ETZ or ValuCard (now unified payments).

    Now, you did not mention that these solutions offering free APIs are charging higher transactional fees compared with Interswitch. Reason is they still have to pay the interswitch& then mark it up to make their own profit.

    So what are the alternatives? Unfortunately, banks do not issue ETZ cards except for special schemes such as mobile (where banks issue virtual cards). Mastercard is processed by interswitch. NIBBS is not licensed to operate as a card scheme or processor & they will not be licensed. Now let us talk about Valucard. Valucard did 61% of ATM transactions last year and 64% of PoS transactions. In terms of card transactions, they have overtaken interswitch. Valucard does not do collections e.t.c. But guess what? Valucard’s API is also in the region of N150k.(except it has changes along with their new brand name)

    It is a waste of time fighting on a blog. Market forces determine pricing. It is part of business to skim the cream in the absence of competition. The only way to break the monopoly is to develop truly unique with great value& do the HARD WORK….and the HARD WORK is to integrate DIRECTLY to the banks.
    It is CLEAR then that as against what you are suggesting, Interswitch will be around FOR A LOOOOONG TIME& I suspect…FOREVER!…PayPal e.t.c can come buy them up (will cost about N60-100billion now…..$500M) but they will remain…

  • http://www.facebook.com/simi.ajayi Simi Ajayi

    lol @facebook-1155619942:disqus . But Joe should state his opinion instead of insulting the dude na

  • http://pulse.yahoo.com/_T674E3DOHBIVYPZBUJCU57JOXI Frank

    It’s very easy to deploy Interswitch API. We have done that countless of times. Any body who finds it difficult to integrate Interswitch API is a lazy programmer. Quote me anywhere.

  • Moore

    @ae1f0f26642568cb7074946489fd05c5:disqus so what’s your point?….. you sound like some Nigerian cultist.


  • Dolapo

    Try paypal or 2checkout and see how easy interswitch is!

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  • http://twitter.com/lafod Afodunrinbi lanre

    @BigChiefX:disqus you speak my mind. have got no other comment. even egbon @techloy need to be educated more on the matter.

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  • onyango ogolla

    Poor fellows, back in Kenya, we dont do blame games. This is IT, invent a solution and pioneer it for FREE, yes FREE. A few years later, everyone has to subscribe to it at a FEE. That’s how you fight the big giants. They might endup begging you to sell them your product. And while you’re busy complaining, we’re going to crouch on your backyard with what will start up as a simple (FREE) mobile payment solution, 2 years later, you will be paying us like slaves. Wake up all of you.

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  • Tiny Ant

    You are just dumb. How do they become doomed because others have licensing? Ok, that was a year ago, maybe you are smart now..