Visa, which is investing US$1-billion in Africa over the next five years, plans to train and fund fintech start-ups to help it tap businesses and consumers on a continent where McKinsey & Co estimates that up to 90% of financial transactions are conducted using cash.

The San Francisco-based technology firm plans to train 40 start-ups and fund a few each year, Andrew Torre, Visa’s president for Central and Eastern Europe, Middle East and Africa, said in Marrakesh, Morocco, on Wednesday.

Investors in Visa have grown increasingly worried about the company’s growth prospects in developed markets like the US, where digital payments are already widely adopted. That makes Africa, home to more than 1.4 billion people — about a third of whom don’t have access to financial infrastructure — a growth market for Visa and Mastercard. Visa expects fintechs to help it access as many as 50 million merchants that don’t use digital payments.

“This is how we’re going to reach” the 1.4 billion consumers that are out there, Torre said in an interview on Wednesday. “We’re really interested in enabling these fintechs to be able to go into these markets and work with our existing ecosystem.”

In a report published in August, McKinsey estimated that Africa’s financial services market could grow at about 10%/year to top $230-billion in revenue by 2025. Visa, which increased its employee strength in Africa by 50% in the past two years, plans to open a new office in Tanzania. It already has 10 offices on the continent.

Africa’s median age of about 20 years is the world’s lowest, according to McKinsey. A growing number have gained access to mobile phones for the first time, offering opportunities for Visa and its rivals.

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“That’s a really powerful set of factors,” Torre said. “Everyone has handsets, so it’s easier to reach them. It’s a really good recipe for us investing and growing.” — Reporting with Mike Cohen, (c) 2023 Bloomberg LP