Payment, remittance firms dominate Nigerian fintech scene — Report

Payment and remittance firms emerged as the most dominant startup services in Nigeria’s fintech space, recording a share of over 30 per cent, according to a recent report by Agpaytech, a finance-based research organisation.

Agpaytech’s findings highlight the country’s significant achievement in real-time payments. The country ranked 6th in the ACI Worldwide league table of the most developed real-time payments markets, recording 7.9 billion transactions in 2023 and is expected to hit 19.7 billion by 2028.

The report further disclosed that lending and financing firms hold a substantial share, accounting for 20 percent of the market beyond payment and remittance services. Blockchain technology firms, which are revolutionising various industries with decentralised solutions, make up 13 percent. Investech companies focusing on innovative investment solutions represent 9.5 percent of the market.

Others include personal finance firms with 8 percent, business administration and insurtech with 3.5 percent each, regtech with 2.2 percent and Security and IDs with 1.8 percent.

In 2023, Statista reported 217 fintech startups in Nigeria, a 50.6 percent decline from the 144 startups reported in 2022.

Agpaytech’s report revealed that the rise in fintech startups can be attributed to the convergence of increased internet penetration, the mass number of Nigeria’s unbanked and underbanked population, and the growing number of customers demanding digital financial services.

Also, fintechs concentrate not only on banking services but have widened their net to non-financial services and integrated robust payment systems in transport, education, trade, SMEs, utility payments, and others.

“The huge investment and partnerships boost from international and local players are making FinTech offer instant, convenient and accessible banking services,” it said.

Despite the ongoing growth, Statista revealed that the average transaction value per user in Nigeria’s fintech segment is $2. The number of users is projected to reach 2.11 million by 2027. User penetration stands at 0.4 percent this year and is expected to rise to 0.9 percent by 2027.

Fintech operators such as PalmPay have over 30 million users and 1.1 million businesses in their cashless payment ecosystem as of February. Similarly, OPay reported over 30 million users. This has sustained the growth of digital payments in the country.

According to the Nigerian Inter-Bank Settlement Scheme (NIBSS), the value of digital payments grew by more than 50 percent to N237 trillion in the first quarter. A BusinessDay analysis revealed that electronic payment channels were used 3.09 billion times in Q1, a 6.2 percent increase from the 2.91 billion times used in the corresponding period 2023.

According to the authors of the Agpaytech report, the use of cards, ATMs, Point-of-Sale (POS) terminals, electronic fund transfers, mobile payments, and other central bank reforms also drove this growth.