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Business News

FinTech Wars: Access Bank reveals how much it lends daily as payday loans

Nigerian Banks are in stiff competition with FinTech startups over what is regarded as the highly lucrative Quick Loan Segment.

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Access Bank Plc, Nigeria's Creative Industry needs urgent financing from commercial banks to bridge unemployment gaps - Herbert Wigwe

The MD/CEO of Access Bank Plc, Herbert Wigwe revealed the bank has set a daily target of N400 million loans to at least 20,000 customers. Mr. Wigwe made this comment during the bank’s investor and analyst call on Monday, September 9th, 2019.  

Competition: Nigerian Banks are in stiff competition with FinTech startups over what is regarded as the highly lucrative Quick Loan Segment. FinTech’s startups with a huge financial war chest from patient investors have deployed their cash towards marketing and tech innovative products that have changed the way borrowers receive money via loans.  

Currently, Nigerians who qualify for these loans can obtain them between 5 minutes to less than a day with no collateral or documentation. Some obtain the loans via native mobile apps owned by the FinTechs relying only on their phone numbers as documentation. These aggressive initiatives have put the banks on the defense, resulting in the release of competitive quick lending products. 

Target: Access Bank claims its Quick Loan Scheme or Payday Loan (as the bank calls it) disburses about N200 million daily to 4,600 customers and the bank is eager to double that number to N400 million and 20,000 customers by end of the year.  

“We have also grown our digital loan business as far as our financial inclusion and normal traditional retail strategy by expanding on our digital lending capabilities to include more products such as salary advancements, small tickets, personal loans and device financing in addition to what we call our payday loans.

And all of this is done on our QuickBucks application which basically houses all of these products. Today we are disbursing on average ₦200 million to 4,600 different customers through the click of a button daily. And we have set for ourselves a target of about ₦400 million daily to at least 20,000 customers, and we are on course to achieving this. This basically generates very low NPLs and is properly priced because a lot of it goes to customers who have their salary accounts” Wigwe

Charges: Access Bank charges an upfront fee of 1% flat, 4% flat interest and insurance of 0.15% of the loan amount is taken upon loan disbursement (5.15% total all payable upfront). The loans are for 31 days.Average all-in lending cost in the market is between 4-6% monthly.

On the offensive: Access Bank also claims it has been aggressive with the marketing of its payday loans and has now booked about N18 billion in the first half of 2019 alone from N11 billion a year earlier. The CEO also claimed the bank has issued out about 1 million unique loans as at June this year.  

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Default rates: Quick lending loans are highly susceptible to default risks so we sought to know what the bank’s response what. They reported that default rates for its payday loans are below 3% claiming that in most cases it is 0%. Explaining further, they assert that the reason for the low default rates was because their borrowers were salary earners who already have accounts opened with the banks and their salaries domiciled in those accounts.  

“So for the digital loan book, which is largely dominated by payday loans at the minute, the NPL ratios there have typically been well below 3%. Now, the reason for this as Herbert alluded to earlier on is they are based on customers who already have their salaries with us. Therefore, typically the loans do not go bad in the traditional sense. In some cases, you might find the occasionally delayed salary payment, for that period we might see an inching up in the NPL ratio. But the NPL when you get the salaries as you know is going to be very low for a long time to come. So those are the kinds of ratios you have seen. There are periods when it is 0%. Almost every employer has fully paid up the salaries. When there are delays in payment typically in some cases it can take three or four months for those salaries to come through. Eventually, they come through and the NPL again trends to 0%.”  

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On the bank’s website, they highlight that you do not need to have a salary account in Access Bank for you to access the Payday loan. The bank claims you will, however, need to open an account in the bank for the loan to be disbursed.

What this means: Nigerian Banks may not be nimble, but they have the financial muscle to engage in a long-drawn battle in the quick loan space.

  • While stifling regulations and inroads into this space by deep pockets like MTN remains a huge threat, their acquisition route is shorter as most of the borrowers are already customers within the bank.
  • Access Bank claims it has 31 million customers and acquires at a rate of 500,000 new customers daily relying mainly on digital means and its agent banking initiative.
  • Access Bank has signed up about 1.6 million new customers since it merged with Diamond Bank.  

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    Business

    FG signs new Sustainable Development Goals agreement with UN

    The Agreement is for new development cooperation with initiatives towards achieving Sustainable Development Goals set in the UN Agenda 2030.

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    Xenophobia, FG reacts to inclusion of Nigeria on religious freedom blacklist by United States

    The Nigerian Government has signed a deal with the United Nations to develop new cooperation towards achieving Sustainable Development Goals.

    This was disclosed by the Minister of Foreign Affairs, Geoffrey Onyeama, in a statement on Thursday after the agreement was signed with the United Nations Office for Project Services, UNOPS, represented by Ifeoma Charles.

    The Minister said, “On behalf of the Nigerian Government, I signed an agreement with the UNOPS represented by Ifeoma Charles Multi-Country Office Rep. The Agreement is for a new development cooperation with initiatives towards achieving Sustainable Development Goals set in the UN Agenda 2030.”

    What you should know 

    The 17 Sustainable Development Goals are:

    No Poverty; Zero Hunger, Good Health, and Well-being; Quality Education; Gender Equality; Clean Water and Sanitation; Affordable and Clean Energy; Decent Work and Economic Growth; Industry, Innovation and Infrastructure; Reducing Inequality; Sustainable Cities and Communities; Responsible Consumption and Production; Climate Action; Life Below Water; Life on Land; Peace, Justice and Strong Institutions; and Partnership for the Goals.

    Continue Reading

    Business News

    Best payment gateway platforms to avoid scams in your business

    A payment gateway is a technology used to accept and hasten debit or credit card purchases from customers.

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    Many businesses in Nigeria have adopted the online payment method because it is safe, fast, secure, and convenient. In recent times, fintech startups in Nigeria have developed safer payment channels to help businesses conveniently receive online payments.

    What is a payment gateway?

    A payment gateway is a technology used by merchants to accept debit or credit card purchases from customers. Integrating a payment gateway into your business is highly beneficial as it offers a more secure transaction process for your customers. It can also expand your customer base exponentially because many people will have access to your business at all times. The payment gateway offers faster transaction processing and customers can avoid the inconvenience of long queues.

    In Nigeria, there is a wide range of payment gateways to choose from as a business owner. Before choosing a payment provider, you have to find out what each provider is offering and at what cost. Also, look out for PCI-compliant and SSL certificates in order to avoid security problems.

    Here is a list of the top payment gateway providers and what they offer.


    Paystack

    Paystack is a growth engine for a new generation of innovative, forward-looking organizations operating in Africa. The company makes it easy for businesses to accept secure payments from multiple local and global payment channels, while also providing tools to help you retain existing customers, and acquire new ones.

    Onboarding and approval take approximately 30 minutes, Paystack accepts payment in USD, GHC, NGN; and offers a wide range of payment methods like Card, Bank Account, Bank Transfer, USSD, Visa QR, and Mobile Money.

    Pricing

    • Integrating Paystack is 100% free.
    • Paystack charges 1.5% + ₦100 for local transactions and 3.9% + ₦100 for international transactions.
    • ₦100 fee is waived for transactions less than ₦2500.

    Flutterwave

    Flutterwave provides the easiest and most reliable payment solution for businesses anywhere in the world. The company makes it easier for Africans to build global businesses that can make and accept any payment, from anywhere across Africa and beyond.

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    Onboarding and approval happen immediately. Flutterwave offers a wide range of payment methods like Mastercard, VISA, Bank Account, USSD, Bank Transfer, POS, and Visa QR (for local payments); and Mastercard, VISA, and AMEX (for international payments).

    Pricing

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    • Integrating Flutterwave is free.
    • Flutterwave charges 1.4% for local transactions and 3.8% for international transactions.
    • Processing fees are capped at a maximum of NGN 2,000.

    Remita

    Remita is a payment solution that helps individuals and businesses make and receive payments, pay bills, and manage their finances across multiple banks. Remita accepts payment in Naira and USD.

    Remita offers a wide range of payment methods including Internet Banking, Debit/Credit Cards, Bank Branch, POS Terminals, Mobile Wallet, Cash Agents, mPOS, Direct Debit, Standing Order, and Electronic Purse.

    Pricing

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    • Setting up Remita for your business is free.
    • Remita charges 2% for local transactions and 4% for foreign transactions.

    Interswitch Webpay

    Interswitch is Nigeria’s leading technology-driven digital payments company, helping to shape the payments ecosystem across the growing e-commerce sector in Africa. Interswitch offers a wide range of payment methods including all Nigerian cards, Verve, MasterCard, and Visa. Onboarding and approval take 1 – 2 weeks approximately.

    Pricing

    • Interswitch charges a one-time integration fee of N150,000.
    • For transactions below N133,333, a fee of 1.5% applies, and N2,000 flat fee for transactions above N133,333.

    PayU

    PayU is a global payment platform that provides a secure way for individuals and merchants to accept and process online payments without the need for their own websites. PayU offers a variety of payment methods including Mastercard credit and debit cards, Verve, Visa and EFT bank transfer.

    Pricing

    • PayU has a free setup cost.
    • It has a 2% service charge on all transactions.

    Voguepay

    Voguepay is an online payment gateway that allows businesses to process payments in any currency from customers all around the world. Vogue accepts payments via local and international payment methods including Verve, Visa, Mastercard, Bank Transfer, and Voguepay wallets.

    Pricing

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    • Vogue pay charges N1500 (with Corporate Affairs Commission Certificate) and N2500 (with Government issued Identity cards) for setup.
    • Local transactions attract a 1.5% charge, while international transactions attract a 3.8% charge.
    • Onboarding and approval to Voguepay take between 1-5 days.

    Monnify

    Monnify is a payment gateway that allows businesses to seamlessly process payments from customers from multiple payment channels. It provides an easier and faster way for businesses to receive payments from customers on their web and mobile applications.

    Monnify accepts payments via USSD, Internet banking, mobile banking app, and all Nigerian debit cards.

    Pricing

    • Monnify setup fees and maintenance costs are free.
    • The fee for account transfers is capped at N500 per transaction or a flat rate of N300 (excluding VAT).
    • The card fee is capped at N2000 per transaction.

     

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    Adopting a payment gateway for your online business can reduce the risk of fraud and also help you retain your customers. This means that your business is open 24/7 and your customers can shop at any time from the comfort of their homes.

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