Mobile App Revolution and the Transformation of Digital Payments in Nigeria

Like most African countries, technology has given Nigeria’s banking scene a well-deserved transformation. Mobile applications, USSD, and even internet banking have joined cash as alternative means to transact with one another over the past few years. 

Today, the average Nigerian does not need to visit the nearest bank branch to send money, pay bills, or even convert Dollars to Naira. All that (and more) can be performed using a smartphone, tablet or laptop linked to a digital bank account. Characterized by favouring online transactions over physical dealings, digital banks offer consumers diverse benefits. 

Justifying the growing appeal of digital banks and mobile money operators, a research paper authored by Kofi Apori and Alyce Ebri makes a strong case. “Digital Banks have grown in popularity because they make banking convenient by offering services that allow customers to open accounts, request debit cards and perform complex transactions just with a single click of a button on their smartphones, laptops or any other digital device,” Apori and Ebri wrote. 

It is worth noting that while these digital banking platforms attract many consumers, the reason is not because their traditional counterparts have failed to evolve. After all, the likes of Zenith Bank and Fidelity Bank have mobile apps that offer internet banking, and even USSD transactions. However, many of these mobile apps are notorious for service downtimes which result in failed transactions. In April, Technext reported that the volume of unresolved failed transactions had reached 40%. When a transfer or bill payment fails,  it results in frustration. It also dampens a customer’s faith in their current bank. 

What’s more, the process of getting a reversal of funds is problematic. Although many traditional bank apps offer a dispense error feature on their mobile apps,  many Nigerians have learned that they must visit the nearest branch to complain. Doing that increases the chances of getting a resolution. 

Thankfully, the last five years have seen the rise of mobile money operators who proffer solutions to some of these problems that traditional banking apps face while ensuring that a larger portion of the Nigerian population is included financially. 

Read also: PalmPay recovers over $677 million for 853,000 customers, calls for user security

What Nigerian digital banks are doing differently; using PalmPay as a case study  

Before diving into the unique offerings of the newer financial institutions in Nigeria, the country’s financial inclusion rate deserves a mention. Despite the availability of traditional banks coupled with the emergence of neobanks, this report found that over 1 in 3 adults lack access to basic financial services. 

While Nigeria has a high financial exclusion rate, financial institutions view this as a largely untapped market. As such, it presents them with the chance to test and roll out innovative solutions. Like traditional banks, Nigeria has a vast amount of fintech platforms including PalmPay, Opay, Kuda, and others that allow payments, transfers, and other financial transactions. While these fintechs offer similar products, the proof is in the pudding. 

Consider PalmPay, which is dedicated to not only closing Nigeria’s financial inclusion gap but also enriching customers’ lives with reliable service delivery. Although PalmPay commenced operations and has been acquiring users since 2019, its reliability made the headlines earlier this year. 

PalmPay and others stepped up when Nigerians struggled to withdraw cash thanks to the currency redesign policy that was enforced at the end of last year. In a country where cash still commands attention, millions of citizens were unprepared for a Naira scarcity. However, some forward-thinking institutions were. 

Chika Nwosu, PalmPay’s Managing Director told Technext earlier this year that the cash crunch was anticipated and prepared for. “We were well prepared for it. As soon as the federal government, through the central bank, made the policy, we went to work. What we did was to design and create nearby agent services, which helped our customers access agents nearby to them to swap the naira notes,” he explained. 

PalmPay’s mobile app was incredibly reliable during the cash shortage. With it, many Nigerians seamlessly moved to electronic transactions. The need for mobile applications for payments has now exceeded simply transferring money to other individuals and businesses. 

There is now a need to pay for electricity bills, purchase airtime, fund an online wallet, or even pay for a visa application. A quick visit to the dashboard of many modern-day fintech apps presents a world of options. 

From paying electricity bills to funding sports betting wallets, PalmPay welcomes every category of Nigerian. What’s more, the app also provides incentives like cashback rewards and discounts that ensure that Nigerians can pay some of their most important bills cheaper than using other means. 

The list of qualifying transactions includes bill payments, funds transfer and remittances, and airtime or data purchase. Occasionally, users get discounts on airtime or data purchases. 

PalmPay has a network of over 500,000 agents and 400,000 merchants cut across the 6 geopolitical zones in Nigeria delivering top-notch financial services. PalmPay rewards users through different platforms such as PalmPay Data Friday where users get 10% off their first two recharges. Also, there’s an ongoing “Recharge Glo and Win” weekly bonanza where users have won iPhone 14 Pro Max, Hisense 55-inch TVs, and Samsung Galaxy Fold 4. More prizes are also up for grabs.

The journey ahead

Although cash has resurfaced in banks, POS operators’ purses, and the hands of Nigerians, the reliability of the fintech platforms that saved them left an unforgettable impression. As such, it is not surprising that fintech platforms still get the spotlight. The government and other stakeholders must accept that cash will run its course. 

Many will expect digital banks and mobile money operators to champion the growth of Nigeria’s financial services sector.  Statista projects that Nigeria’s digital payments market value will reach $16.69 billion this year. However, the players in the space must tighten their customer acquisition/retention game and maintain the quality of service rendered.