Before the startups: How Mitchell Elegbe built Interswitch on a ₦200M bet

There is a version of Nigeria’s fintech story that starts with app downloads and venture capital term sheets. This is not that version. It starts in a banking hall, with a young engineer standing in a queue, holding a tally number, waiting to withdraw his own money.

That was Mitchell Elegbe of Interswitch in the early 2000s, three years into his career after a stint experiencing how payments worked in the UK. He had never worked in banking. He had never worked in payments. What he had was a queue, a tally number, and the growing conviction that Nigeria deserved better than this.

The idea that became Interswitch started as a business case, and its first real test did not go well. At an early meeting at the House of Equity, Elegbe pitched a group of bank CEOs on the concept. One of them, he recalls, tore the business case apart on the spot. He went back to the drawing board, this time bringing in Accenture, whose existing work with Nigerian banks meant they already understood what those banks were looking for.

The revised pitch landed. A few bank CEOs took meetings. Elegbe was invited to management retreats. The idea began to move.

Funding was the next wall.

There was no ecosystem of venture capitalists circling Nigerian startups the way there is today. Elegbe has said he did not even know the term “venture capital” at the time. What existed instead was a Bankers Committee and Central Bank of Nigeria scheme called SMEEIS, which required banks to set aside a share of their profits to invest in small and medium enterprises.

Based on his business plan, Elegbe needed ₦450 million. The scheme’s limits meant he walked away with ₦200 million instead, a little under half of what he had asked for.

The company’s own plan was to reach profitability within four years. It got there in one year and stayed profitable for the 19 years that followed, according to Elegbe himself, discussing the company’s trajectory years after its founding in 2002.

Read also: Interswitch returns to N23bn profit as Nigeria drives over 90% of revenue

The idea that made Interswitch unique

The infrastructure-first instinct that shaped Interswitch’s early strategy is, in Elegbe’s own telling, close to a parable about roads. Build the infrastructure connecting Nigeria’s banks, the thinking went, and the traffic will follow, the way a community builds roads before it moves goods along them. But roads without vehicles move nothing.

Interswitch had built the connections between banks, and the volume still was not there. That gap is what led the company into building actual products on top of the infrastructure it had laid, rather than infrastructure alone.

The clearest example is Verve, Interswitch’s domestic card scheme, and the reasoning behind it doubles as a small case study in reading a market correctly.

Elegbe noticed that the number of bank accounts in Nigeria vastly outstripped the number of those accounts that actually had a card attached. The reason, he found, was cost. Banks considered traditional international cards, Visa and Mastercard, too expensive to issue broadly, so those cards stayed limited to an elite slice of the customer base.

Elegbe’s read on the opportunity was blunt: at the time, he estimated less than 5% of Nigerians travelled abroad, meaning the case for an internationally enabled card was thin for the vast majority of the market. He built Verve instead, a card charging in local currency and designed specifically for a domestic economy, on the logic that the remaining 95% of the market was more than large enough to build a business around.

By the time of this conversation, Elegbe put Nigeria’s total card count, issued across the banking sector, at roughly 65 million, with Verve holding close to 49% market share of that figure. The number is now over 120 million, and that trajectory described is a card scheme that went from a bet on an underserved 95% of the population to the single largest domestic card brand in the country’s banking sector.

Elegbe has also been careful, more than once, to correct a common misconception about what Interswitch actually is. It is not a card company. Verve is a card scheme that runs on Interswitch’s infrastructure, alongside Mastercard and Visa, both of which also process transactions through Interswitch’s rails, with Visa having taken a direct investment stake in the company.

Elegbe has described this as a deliberate “live and let live” approach, building a highway that competitors are welcome to use, on the same commercial terms as everyone else, because growing the ecosystem benefits the company more than hoarding the road for itself.

None of this reads like the founding myth of a company built for a quick exit. Elegbe, asked directly and more than once over the years about an Interswitch IPO, has consistently declined to give a straight answer, framing it instead around four questions he says matter more: whether Interswitch is making an impact, whether the ecosystem around it is growing sustainably, how it is handling the ever-present threat of cybercrime that comes with going electronic, and whether it is setting an example that draws more people into the field.

His answer to all four, he says, is yes, and that the rest, valuations, an eventual exit for the private equity investors who hold a stake in the company, is a matter of time rather than a plan on a whiteboard.

It is a very different register from most fintech founding stories being told in Nigeria today, less about disruption, more about a young engineer who stood in a bank queue once, decided the country deserved better, and then spent the better part of two decades building the roads.

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