Business News
Digital payments sustains surge, affirms growth prospects
The volume and value of PoS transactions grew 46.7% y/y and 40.6% y/y to 41.3 million transactions and N313.4 billion respectively in Jan 2020.
According to data published by the Nigerian Inter-Bank Settlement System (NIBSS), volume and value of PoS transactions grew 46.7% y/y and 40.6% y/y to 41.3 million transactions and N313.4 billion respectively in Jan 2020. However, on a q/q basis, volume and value of POS transactions declined 10.5% and 15.9% q/q from December 2019’s figures.
In addition, volume and value of mobile payments increased 914.5% and 396.6% y/y to 7.4 million transactions and N133.2 billion but declined 10.7% and 10.6% q/q respectively. We note that the decline in January 2020 relative to December 2019 was expected as transactional activities usually receive a boost from spending associated with the festive period.
In our view, the robust y/y growth was driven by greater adoption of digital platforms among the populace and increased investments by players within the sector.
We recall the Federal government raised VAT and introduced stamp duty charges of N50 per N1,000 transaction value carried out via PoS terminals in Q4 2019. We expected this to impact on the willingness of Nigerian consumers to use POS terminals but this was later revised by the CBN to N50 on a minimum of N10,000 transaction value.
[READ MORE: Bank’s lending rates decline albeit slower than expected)
We think the decision of the apex bank helped in sustaining the gains recorded in the sector. We note that the aggressive expansion embarked upon by key players including Banks and fintech players has contributed to the growth in digital payments. Banks and regulators likewise have increased awareness of these alternate digital payments platforms particularly in rural areas as part of the financial inclusion drive. PoS terminals availability has continued to improve with POS terminals deployed growing 37.3% y/y to 306,409 terminals.
As we highlighted in our FINTECH thematic report (The Nigerian Fintech Industry; the growth frontier of the new decade – 9 Jan 2020), we believe Nigeria’s growth frontier for the next decade is the digital payment & lending business.
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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.
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.
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
- 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
- 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
- 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.
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.
