VCAP1's purchase of fintech firms gets green light

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 05 Jun 2023

The Competition Tribunal has approved, without conditions, the transaction whereby VCAP1 Alliances intends to acquire Virtual Payment Solutions (VPS) and Switchone.

According to a Competition Commission statement, post-merger, VPS and Switchone will be wholly-owned subsidiaries of VCAP1.

VCAP1 is a newly-established special purpose vehicle incorporated for the purpose of the proposed merger and does not trade. The controlling shareholder is a private equity business.

Johannesburg-based VPS operates as an intermediary between mobile network operators and retailers by offering various virtual prepaid solutions.

Its core business is the repackaging and bundling of airtime to be sold to customers through various channels.

“The commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets. The commission further found that the proposed transaction does not raise any public interest concerns,” says the CompCom.

Switchone is a recently established company that operates as a technology-enabled third-party payment processor that is South African Reserve Bank-approved.

It has developed a cloud-native, bank-independent, financial switch that focuses on the provision of high-volume payments and value-added services to the South African market, according to a statement. It also intends to operate a business-to-consumer business through an e-commerce platform that facilitates its product offerings.

The proposed merger comes as more fintech firms develop digital payment solutions as part of a national strategy for the ecosystem, to increase digital and financial inclusion in SA.

According to BankservAfrica, nine out of 10 transactions in SA are still made in cash, with 95% of informal small business customers and 63% of formal business customers opting to pay in cash.

To reduce the reliance on cash, the move to introduce a next-generation payment ecosystem will make it easier for consumers to transact online, it says.