#StreetTech: Roadside Banking Vendors are Meeting the Needs of Underbanked Nigerians. But the Risks Outweigh the Gains

Ejike Kanife
Internet banking shops are rapidly sprouting across Lagos. Street tech this week explores their business, challenges, hopes and immense profitability.
#StreetTech: Roadside Internet Banking Vendors are Meeting the Needs of Underbanked Nigerians. But the Risk Outweighs the Gains

Internet banking shops are quickly becoming an integral part of life in this hectic city of Lagos. They appear like regular shops, ubiquitous and undeniable, sweeping through the landscape especially of residential areas.

As they say in Lagos, “everything na money” and once people identified this as a veritable means of income, they have embraced it fast, milking it for all it’s worth.

Challenges of Internet Banking Shops Catering to the Financial Needs of Lagosians
More often than not, internet banking shops offer several other internet services

And it is worth a lot. A great lot. It is therefore not a surprise that more and more entrepreneurs are adopting the business, leading to its rapid spreading across the state.

There is an Igbo adage which says if a road is good, people will journey on it more and more often. Internet banking shops are proving to be the proverbial good road. Which is why I took to the streets of Lagos to find out about its proliferation, efficacy and what makes it tick and so alluring.

What I saw…

One of its many operators, Mr Steven of Phoenix Tech in Egbeda notes that there is room for as many people as decide to go into the business.

Challenges of Internet Banking Shops Catering to the Financial Needs of Lagosians
Looking around one of the shops

From Ajegunle to Mushin and Egbeda, the story remains the same. There is a very large pool of financially underserved Lagosians who barely have enough time to invest in their hectic lives.

They don’t want to waste time visiting faraway banks and languishing in their queues, sometimes under the blistering sun or drenching rain. As such, they would rather walk into the nearest Internet Banking shop and conduct their business.

“Customers needed banking services and around my area I noticed it was difficult to get such,” Olanrewaju, an Internet Banking shop owner in Mushin says about why he got involved in the business. “This business is very good because we have a huge market.  If you notice, distance to the nearest bank is far which is one major reason why this business is doing well,” he adds.

The big problem which internet banking shops solve according to an operator in Ajegunle who identified himself simply as Andrew is the uneven spread of banks in the area.

“The banks are not really spread. If you look at this whole area now there is no other bank except FCMB. So the banks are mostly located in one corner and people that are not living near them will find it hard to go there.”

A customer, Patrick, who runs a betting shop agrees. His preference for transacting with Internet Banking shops rather than dealing with banks is really a matter of convenience.

The bank wahala is too much,” he says. “About three weeks ago I tried funding my shop account at a bank. The money was removed from my bank account but it didn’t reflect in my betting account. That was how they started sending me from branch to headquarters in Marina.

“Up till today, that money is still hanging. If it is this shop at least I will know who to hold and they are the people that will be running up and down”, he concluded.

How Lucrative is it Really?

It is easy to conclude, based on how quickly internet banking shops are sprouting everywhere, that the business must be lucrative. Still, I thought it nonetheless imperative to hear it from the actors themselves. While refusing to state their returns, they all agreed the business was profitable.

Betty runs a very conspicuous internet banking shop in the Orisunbare area of Alimosho. She says the business is as lucrative as it is because Nigerians are now embracing mobile banking.

We get between 20 to 25 customers per day with transactions sometimes involving N90,000 sometimes N150,000 and sometimes even 500,000.  People now prefer coming here instead of going to banks because of the time. You know, this one (shops) is easy you won’t stay more than five seconds and I’ve attended to you. Banks are far so they consider the time, the transport and then, how much will I even charge them? In the end they prefer patronising us because it is more convenient for them.

Challenges of Internet Banking Shops Catering to the Financial Needs of Lagosians
Price list for transactions

“Business has been good,” Steven re-echoes Betty’s assertion. “The idea is to use a wide range of platforms. I use Quickteller because it is the backbone of internet banking for most financial institutions in Nigeria. I also use Jumia 1 for some special customers and for when I experience downtime with Quickteller.”

Andrew admits that they face some serious problems but the business is lucrative nonetheless. He, however, advised people who wish to join the business to combine it with other forms of internet services like maybe sim card sales and registration, JAMB (Nigerian University Entrance Examination) registration and like him, Lagos Auto Registration.

Olanrewaju agrees with Andrew as himself does sim card registration as well as Spectranet/Swift subscription. In the end, he describes his shop as a real business centre.

Between Withdrawals and Deposits

Customers who patronise internet banking shops do so for two major services; withdrawals and deposits.

Of course, there are other services like bill payment and subscriptions, but the two major services which drive people from banks into the happy arms of internet banking shops are withdrawals and deposits. But which is more sought after?

“Out of our 25 customers let’s say 15 or so will be for withdrawals,” Betty whose shop renders exclusively transfer and withdrawal services says. “We usually have more customers that are withdrawing more than depositing.”.

A customer who wishes to remain anonymous says he comes to internet banking shops when he needs “sharp sharp” money. “I only come here to collect my money. That is the only one I can pay for. If I want to deposit money, I can’t pay for that because it is like giving you my money and paying you for taking my money,” he says.

Challenges of Internet Banking Shops Catering to the Financial Needs of Lagosians
Sending and receiving money at your doorstep

Steven breaks it down even further, noting that the service likely to be engaged in depends on the days of the week.

“During the weekdays we have more of deposits compared to withdrawals. Mondays to Wednesdays we have less withdrawals, but from Thursdays to Saturdays we have more of withdrawals and less of deposits,” he says.

He also explains that at the beginning of the month when salary-earners must have been paid, there tends to be more withdrawals. The business people also want to do their turnover for the previous month at the same time so they also make their deposits then. As such they witness a lot of bulk deposits.

MTN and Airtel Banking License Question

Recently, both MTN and Airtel began the process of acquiring licenses to operate payment banking services. These telecom giants have great geographical spread, the reach and the network to cover them. As such, one expects that they could pose stiff competition to internet banking shops.

But the shop owners seem to be adopting a policy of collaboration rather than competition.

“It will be better because most of the businesses already depend on them,” Andrew says. “Look at MTN now, they are no longer Diamond Yellow. The new one the CBN has given them is MoMo. They have a network to run the mobile money so I think it is better compared to all these mobile money companies that don’t have the network to run.”

MTN Nigeria Creates Finance Subsidiary as it Awaits Banking License

Steven agrees with Andrew, insisting there is a lot of room for as many people as possible.

“It is good, it won’t affect us because it is location. MTN and Airtel may not have geographical restriction but they already have their offices across Nigeria. They could easily get agents to register under them and some of the agents could be people like me running the business already. So it is good.”


Challenges are an integral part of any business and internet banking shops are not exempted. From Ajegunle to Alimosho, one major problem seems to plague these businesses anywhere I go is deplorable network.

According to Andrew, bad network makes mobile banking in Nigeria very tedious.

“People are just trying to make it seem like it is getting better, it is not getting better, it is getting worse every day because network is an issue. Constantly you find out that people’s money are stuck and hanging. Network is a major problem of this business.”

Olanrewaju suggests that the inefficiency of customer care by service providers contributes.

If I tell you how many times my money has hooked up in mobile money, most times they even forget us. Because once it happens they will say write a letter. Do a mail and other kinds of things.

Innocent, a customer at one of the internet banking shops says he has been waiting for his DSTV subscription money for over five hours. “The money hanged [sic] inside the transfer and up till now they haven’t returned it and the subscription hasn’t gone (not effected). I’m just tired of the matter.”

Challenges of Internet Banking Shops Catering to the Financial Needs of Lagosians
AdeSquare utilises PayCentre, a relatively unknown payments platform

“The biggest challenge is obviously network, Steven says. “And when it rains, it graduates from a challenge to a real problem.”

Andrew thinks the closest solution to the network problem is for internet banking service providers to use a banks’ money transfer service rather than the regular mobile money platforms like Paga and Quickteller.

“If you’re using the bank’s mobile transfer, it is like your account is tied to it. So I will just scroll into my account app and see the history and track my money. And usually banks reverse your money. But all those mobile money like Paga, Now-Now and Quickteller will ask you to send a mail and it could take a long time to reverse.”

The other challenge is security. Andrew narrated how an agent under him was set upon by robbers on his way to a bank and robbed clean of all the money he was taking there.

Steven says he never keeps a regular pattern of movement to avoid being predictable. Moreover, he never gives the impression he owns the business and as such may reduce the likelihood of being targeted. As for Betty, her response reflects the abject helplessness of the security situation.

“It is God o,” she confesses and laughs. “But usually we don’t bring huge money here just a little. When it finishes we request for more. If we receive deposits we try to bank them before they get too much.”

Advice to newcomers

If you’re interested in this business, I’m pretty sure this story has opened your eyes to some challenges and how people already running the business surmount them.

Here are a few pro tips you should pay attention to. Mr Andrew already advised that other services like Internet Service subscription, JAMB registration and even NYSC registration should be added to it.

Challenges of Internet Banking Shops Catering to the Financial Needs of Lagosians
Combining internet banking with other services is advisable

But to the business of internet banking shops proper, Steven advises that you must know the trend and understand when it is peak period for withdrawals and deposits as it would save you a lot of time, effort and maybe, heartache. He also advises that you have reasonable charges otherwise people will run away from you. Then make sure your customer service is on point.

In Conclusion

Financial inclusion remains a problem personified by the gigantic pool of underserved people, not just in Lagos, but in cities across the country. Meeting them at the point of their financial needs is proving to be lucrative business. But several challenges are bedeviling this businesses and sadly, those probems are an extension of the problems bedeviling the country at large.

Security-wise, banks could send reps who will serve as collectors of funds from these internet banking shops. Collectors could be accompanied by security operatives and would also serve as distributors of funds. This could help allay the security fears and endear these internet banking shops to banks providing such value-added services.

With a teeming population of graduates seeking scarce employment opportunities, internet banking shops remain a trusted means of making ends meet.

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