Flutterwave is making waves in Africa's digital payments sector, but the question arises: how long until it directly competes with its own clients?

Just six years ago, processing online payments in Nigeria was a challenging endeavor. Interswitch’s WebPay was the primary processor, but it cost startups around N150,000 ($1,000) just to set up. WebPay also faced compatibility issues with mobile devices and had high transaction failure rates—some startups reported up to 90% of transactions failed. Additionally, Central Bank regulations required online payments to be "tokenized," which restricted the ability to set up recurring payments, and the National Communications Commission further capped premium SMS transactions at N200 (about $1), making subscription services nearly impossible without high fees from telcos.

Now, things have changed. Interswitch has improved its platform, and startups like Paystack have emerged, offering more accessible and reliable payment solutions for Nigerian businesses. Paystack became known as the go-to solution for startups, even getting into Y Combinator and becoming synonymous with seamless, user-friendly payments.

Around this time, Iyin Aboyeji, co-founder of Andela, launched Flutterwave, a U.S.-based African digital payment infrastructure company. Flutterwave provides a single API that connects businesses across Africa with various payment options, including credit cards, mobile money, ACH, and e-wallets, simplifying cross-border payments for businesses. This broad focus makes it distinct from Paystack, which primarily focuses on web payments for startups.

Paystack's CEO, Shola Akinlade, and Aboyeji both highlight that the payment infrastructure problems in Africa are vast, with issues ranging from financial inclusion to low merchant acceptance. While Paystack aims to streamline online payments for African startups, Flutterwave is positioned as a platform that allows anyone to send or receive money across Africa through multiple channels.

Notably, Flutterwave lists companies like Paystack, Access Bank, and Pay With Capture as clients. However, this raises questions about potential competition. With Flutterwave providing a broad payment infrastructure, how long will it be before the company offers similar services to startups, potentially encroaching on Paystack's territory? Both companies have stayed silent on this, but if Flutterwave allows businesses to embed payments directly into their platforms, companies like Paystack might need to differentiate themselves to remain competitive.

Ultimately, as Flutterwave continues to develop its infrastructure, only time will reveal if there's room for multiple major players in Africa's digital payments space or if competition will inevitably increase among these fintech pioneers.