As the online and mobile payments markets continue to rise globally, Nigerian companies are eager to tap into the industry’s potential. Taking the lead from digital payments hub Kenya, Nigeria is looking to embrace more alternative payment providers in 2019.
Digital Payments on the Rise
With more and more people getting access to the internet, our lives are becoming increasingly digital. From shopping to entertainment to keeping in touch with friends, a great part of our everyday activities happens online – and the same is true for financial transactions. After the advent of web banking, digital payments combined the power of the web with the convenience and security offered by alternative payment providers. A variety of online payment methods, ranging from our trusted credit cards to providers like PayPal, Skrill and millennial favorite Venmo, are used across a variety of industries.
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Online gaming has embraced the digital payments revolution, with Fortnite developer Epic Games accepting anything from Amazon Pay to Paysafecard depending on location, and even more traditional games providers like Buzz Bingo offer a wide range of digital payment options. The retail industry has also got in line with the new trend, with Adidas accepting options like PayPal and Apple Pay, while travel operators like Expedia and Southwest Airlines have partnered up with PayPal to offer more payment options to customers. As more and more merchants sign up, the new trend that is set to dominate the landscape is mobile payments.
Nigeria plans for mobile payments revolution by telecom providers
Having reached $55 billion in 2017, the mobile payments market is set to amount to almost $100 billion in 2018 and then surpass $150 billion in 2019. By 2021, it is estimated that its value will rise to roughly $275 billion, demonstrating a 62% average annual growth rate in the years from 2016 to 2021. In Nigeria, the MTN Group has just announced that it intends to apply for regulatory approval to launch a new mobile banking service next year. The South African company aims to take advantage of the government’s plan to allow telecom providers to offer mobile banking and payment services in order to cater for millions of underserved citizens with no bank account.
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The policy is modelled after Kenya’s example, which saw Safaricom launch it M-Pesa mobile money service, which has been extremely successful. MTN aims to put its plan in motion in Q2 2019, offering the option to its 56 million customers. Rival companies like Airtel, 9mobile and Globacom are expected to follow suit. Electronic payments are on the rise in Nigeria, which saw 12 million transactions take place in Q4 2017 alone, reaching N307 billion ($1 billion) in value, according to research published by the Nigerian Bureau of Statistics. Yet Nigeria still lags behind Kenya and Ghana in mobile payments. Kenya recorded $45.3 billion in transactions in 2017, while for Ghana the same figure rose to $35.9 billion.
This landscape might change in 2019 when telecom providers start to capitalize on the opportunity offered by the Nigerian government and work closely with banks to offer their new mobile payment services.