Nigeria is one of the countries in Africa with a high population facing life financially excluded. 36.6 million adults in Africa’s largest economy still lack access to financial services.
PalmPay, an Africa-focused mobile payment start-up, plans to bring that segment of the population into a financial world that will make their lives easier, better and more connected.
The company allows any Nigerian to open a financial wallet on its mobile app in seconds and start carrying out transactions including P2P transfers, airtime and bill payment. The only thing required to avail of these services is a mobile number, with the full experience available to those with access to a smartphone.
To be able to do this, the company has obtained an Approval-In-Principle for a mobile money license from the Central Bank of Nigeria, which allows it to build an agent network to facilitate in-person cash in and cash out to its mobile wallet.
PalmPay offers consumers a range of digital services via its mobile application, including transfers, payment of electricity bill, internet sub renewal, DSTV subscriptions, and airtime purchases.
Billing itself as “the payment app that rewards you”, its unique selling proposition of offering cashback and discounts to its users has caught on in the price-sensitive Nigerian and Ghanaian markets.
In Nigeria, PalmPay is offering 10% cashback on airtime purchases and bank transfer rates of N10 with free deposits and withdrawals to its mobile wallet. Over a million transactions have been made on the platform within its first two months of pilot operations and the company is now eyeing rapid expansion.
To support its growth ambitions, PalmPay has raised $40m USD in a seed round led by device brand TECNO Mobile, with participation from NetEase and MediaTek. TECNO is also supporting PalmPay in other ways, such as giving the startup exclusive access to the mobile phone brand’s online and offline distribution network. The PalmPay app will come preinstalled on at least 20m smartphones per year from 2020. And first on the list to be converted to agents are the thousands of TECNO retails stores across the country.
For TECNO, the investment in PalmPay seemed like a natural next step as it seeks to develop its mobile ecosystem. “Tecno has helped expand access to smartphones among the Nigerian population. We are now looking to leverage this infrastructure to further improve people’s lives.” said Stephen Ha, General Manager of TECNO Mobile. “We see a huge growth opportunity in mobile payments and financial services on the continent and are looking forward to working together with the PalmPay team to help shape the future of payments in Africa.”
PalmPay also plans to leverage the network of 100,000 merchants belonging to Visa, which the company counts as strategic partners. In April 2019, PalmPay announced that it would work together with VISA to roll out innovations in the African digital payments space. Visa cardholders can initiate payments within the app and make online and mobile payments by attaching their card details to their PalmPay profile. Non-card carriers will be able to instantly generate a virtual Visa card upon registration.
“Our vision for the app is that PalmPay becomes the one-stop-shop for your digital and financial world and that PalmPay becomes the place to go that has the best choice and offers in the market,” said Greg Reeve, PalmPay Global CEO. “We also welcome other companies to join forces with us so we can work together to deliver the best choice and value for consumers”.
The Central Bank of Nigeria plans to ensure that 80 percent of Nigerian adults are included in the financial net by 2020. In January 2012 the National Financial Inclusion Strategy (NFIS) was launched to galvanise the financial sector around this objective.
According to the World Bank’s 2017 Global Findex database, mobile money drove financial inclusion in Sub-Saharan Africa. The report stated that between 2014 and 2017, there was a significant increase in the use of mobile phones and the internet to conduct financial transactions which contributed to a rise in the share of account owners sending or receiving payments digitally from 57 percent to 70 percent in developing economies.
“Fulfilling the financial infrastructure gap in Africa by using branchless banking services such as mobile financial services, is seen as a promising way to increase financial inclusion,” the International Monetary Fund (IMF) said.
Through PalmPay’s mobile platform, Nigerians without bank account can have access to financial services. Therefore, innovations like the smartphone-based ecosystem being built by PalmPay can play a role in accelerating progress to meet Nigeria’s ambitious national financial inclusion goals.