How GTCO’s fintech firm squares up to competition

Guaranty Trust Holding Company (GTCO), on June 1, announced the launch of Squad after nearly four years of making public its idea of a fintech company built from scratch to challenge competition such as Flutterwave and Paystack.

Squad describes itself as a payment solution that enables all types of businesses and individuals from around the world to make and receive payments in a smarter and simpler way.

“At Squad, we provide business owners with the tools they need to thrive in a digital economy while also promoting their business and introducing them to a market beyond their current reach,” the company said on its website.

It also says it is a product of HabariPay. HabariPay is derived from Habair, possibly adapted from the Swahili word that translates to ‘information’. It was first unveiled by GTBank on November 23, 2018.

Habari was created as a platform to offer users direct access to the largest catalogue of local and foreign music online, a seamless shopping experience, and an exciting way to connect with friends, amongst other features.

Habari was, among other things, GTBank’s most ambitious effort at reinventing itself as a digitally savvy banking institution.

Segun Agbaje, group chief executive officer of GTCO, described the platform then as the bank’s way of reimagining the role of banking. Habari was the first mobile in Nigeria created by a financial institution that focuses on enabling people’s needs and lifestyles rather than providing a limited bouquet of banking products.

Although GTBank insists that Habari was a success, the market did not feel its impact. Nigeria’s e-commerce space continues to be dominated by the likes of Jumia, Konga, Jiji, and new entrants such as Flutterwave, and Paystack. Sources say Habari’s underperformance could have led to the streamlining of its offerings to mostly payment, hence the name HabariPay – a development that was not announced to the public mostly because the bank was building the technology in-house.

Agbaje, who pitched the idea of the fintech company at the Social Media Week in 2019, had said the company would be built from scratch as acquisition raises issues around valuation and product fit. True to his words, Squad was launched with a homegrown team. The leadership of the company traces their roots to different positions in GTBank.

For example, Eduofon Japhet, the managing director of HabariPay and Squad, was the group head of Business Solutions of GTBank. Adeyemi Atanda, chief marketing officer of Squad, was head of digital sales, GTBank, while Omoyosola Afolayan was the finance team lead at GTBank before she joined Squad as chief financial officer.

Agbaje also said during the conference in 2019 that its payment unit – Squad – would be exclusively funded by the holding company GTCO. While putting out a recruitment advertisement for HabariPay in 2021, the company said it was building a payment company that would go on to be a unicorn.

“Payments are central to the development of financial services globally and represent a key growth area for the group,” Agbaje said. “With HabariPay, we have successfully created another pathway towards enhancing the service experience for our customers and creating more value for our stakeholders.”

While Squad is likely to benefit from GTCO’s banking unit by tapping into the customer pool, the company may present a challenge for existing fintech companies such as Paystack in terms of pricing. For one, Squad’s services include payment, payment gateway, PoS, and eCommerce.

Merchants on Squad will be charged a fee of 1 percent on the transaction amount plus N50. Exceptions may apply in respect of travel and entertainment merchants including but not limited to hotels, restaurants, airlines, etc. International transactions attract a 3.5 percent fee per transaction. Squad says there are no hidden charges.

Flutterwave charges a 1.4 percent fee per transaction, which is equivalent to Squad’s 1 percent plus N50. International transactions on Flutterwave attract a 3.8 percent fee. However, transfers to bank accounts cost N45 while transfers to mobile money wallets cost N150.

Paystack has slightly higher pricing at 1.5 percent plus N100. The international transaction fee on Paystack is also the highest at 3.9 percent plus N100.

Squad’s promise of a 24-hour payment to merchants may not be disruptive. Some merchants say Flutterwave also settles payment within 24 hours, sometimes before the time. For Paystack, the money is automatically settled in the merchant’s account the next working day (T+1). Hence, payment received on Monday, for example, is settled on Tuesday.

Read also: GTCO names Squad as new fintech unit

Squad may be starting its operations but it will find GTCO’s continental spread an important advantage if the plan is to penetrate new markets. GTCO’s services are available in 10 African countries. Flutterwave is in 16 countries whereas Paystack is fully present in only three countries.

But experts say the disruptive innovation Squad is bringing is the ability of users to turn their mobile devices into a PoS. There are 89 percent Nigerians with access to a mobile device, but only 28 percent have an active digital financial services account.

“Bank growth is being driven by digital payment services. That is the opportunity Squad is tapping into. This is growth and adoption driven by a young, tech-savvy team,” Kalu Aja, a personal finance expert, said on Sunday.

Aja said Squad could deploy the soft PoS and other payment options immediately to every Nigerian with a cell phone. In other words, anyone with a mobile phone can become a PoS agent as well as a retailer.

“You can deliver and clients pay via tapping their card on the company phone,” he said.

Experts say the competition will be won with quality of service to consumers.

Jude Dike, co-founder and CEO of Get Equity, a platform that democratises startup investment, said the PoS feature on Squad is one disruption that hasn’t been replicated by any exciting fintech company.

“They are pretty much gunning for every physical business, from larger mom-and-pop stores, to even my security that sells mini groceries,” Dike said.