Payment: 99.3% of card transactions are conducted on ATMs (Questions inside)

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As someone who is interested in Nigeria’s payment market, I find myself looking into the trends, happenings and perception of the market. A study by Fortumo reports that 99.3% of all card transactions are conducted on ATMs. Interswitch also reported its transaction volume to be about 3.9 billion which means these transactions are mostly conducted from ATMs. With credit/debit card penetration at <1%, “Most Nigerians do not use cards online". In my quest to understand why, I have the following questions for the house:

  1. Are there still a lot of people who own bank accounts and have refused to use cards online or at all?
  2. Are there still a lot of people who dread the idea of using their cards online for fear of theft, hack or identity theft?
  3. Is it that people feel the payment gateway providers/aggregators are unreliable?
  4. Buyers just want absolute control of their online purchase cycle ( e.g Pay on Delivery)?
  5. Could it be that awareness on the use of cards for online transaction is low or/and the Nigerian internet market isn’t big enough yet?
  6. If people are unwilling to use cards (or even get cards), why would this same people use KongaPay which does a “direct link” to a user’s bank account?
  7. If a lot of Nigerians have cash outside the banks, how does any payment system in the country help these people make payments online?
  8. Why isn’t the mobile payment companies like Paga leading the way in online payments since people are not using cards online?
  9. Do you need a license to roll-out a paypal-like or voguepay-like service within the country? Is there an electronic payment law specifically for this purpose? If no, why is there a lack of variety in the market?
  10. Virtual goods & services: How do people in this space receive payments if people aren’t paying with cards?

whew :smile: these are a lot of questions. It would be interesting to get your thoughts on any of the questions.

Thanks

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  1. Yes there are, and a lot of them probably have a lot of money.
  2. Yes, most of them are the people in 1. Insurance companies need to work with banks on this
  3. Aren’t they unreliable?
  4. Buyers will take whatever option is presented to them.
  5. Yes, awareness is low and internet penetration though improving, is low.
  6. The people who don’t use cards won’t use KongaPay
  7. I guess the banks still have some work to do
  8. I believe they have started
  9. I don’t know, but I’m guessing you will.
  10. Bank Transfers?
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Thanks for taking the time to respond :+1:

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Once upon a time and this was less than 10 years ago less than 1% of the Nigerian population used cards or ATMs. Today there are at least 30-50 million cards so it has been a success in a short space of time.

The same thing will happen sooner or later in the online payment space when users repeatedly use their cards and gain confidence with online services. But Konga, Jumia are not helping with the whole pay on delivery model which discourages card payments. The online card payment learning curve should be with low-hanging fruit like music, movies, books, tickets, recharge cards which are received almost instantly and whose pricing and costs tailors well with the mass market.

But its a matter of time.

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