Tag: Predictions

10 predictions for digital payments in 2025

Congratulations on making it out of 2024, as it was quite an interesting year in which we didn’t know if battling the devil was easier than battling the economy. But as long as there’s life, there’s hope, which is why humans like me never stop the useless endeavor of predicting the future.

Take everything you read here with a pinch of salt; most won’t come to pass. But then, what if?

After all, to err is human and to predict, is human! 

Let’s dive into them.

#1 CBN will lose the cash war again

Like a fighter who wouldn’t just lay flat on the ground; the Central Bank of Nigeria continues to fight agents and cash with many rules and tweaks. But as someone who knows that cash has many tricks up its sleeve, it will give the CBN another sucker punch. 

Why would CBN even lose what seems to be an easy fight?

Because it’s fighting the wrong battle. The CBN is fighting the symptoms instead of the root cause – people need cash to make payments and as long as digital payments have quality and security issues that the CBN isn’t addressing holistically, agents will run rings around the CBN every single time. If the POS is limited to N100,000 per day for transactions, expect agents to migrate to mobile apps for the same thing. Who will catch them?

#2 CBN will (finally) win the fraud war

2024 was the year that, at least, looking back from today, fraud has grown up in Nigeria. Nobody seems to be able to tame it because frankly, there has been zero consequences for gatekeepers. 

While I don’t think we should be blaming the victims, the banks and large fintechs’ apathy to quality KYC and CDD is a big reason for this mess. For a while, people used to ask “what have these fintechs got on the CBN guys?”. The thing was a proper kayefi. 

Well, that was so until the CBN rolled out the big sticks against Opay and others. Guess what, Opay and Moniepoint are moving from careless to having some of the best KYC processes in town. 

With that in place, expect CBN to take the discipline to the entire classroom and rampant fraud could be a thing of the past. Let the church shout hallelujah! 

#3 Moniepoint as a commercial bank won’t happen in 2025 

2 years ago, I predicted that Moniepoint would become a commercial bank and in 2024, tons of outlets ran the stories of this happening in 2025. 

Maybe this is the year they get to do it? Maybe not. 

It made sense 2 years ago but with increasing regulatory demands, CBN’s crazy CRR regime I don’t think will happen this year. Knowing that becoming a commercial bank isn’t like buying an MFB by the roadside; it would take a while to meet CBN’s stringent requirements and for mostly first timers, it’s going to be one hell of a ride.

#4 Virtual accounts get regulated

Virtual accounts have been the best invention out of African banking in the last 7 years. The Nigerian banks nailed it. But our fraudsters nailed it even better 😲. 

Virtual accounts are the payments invention in 10 years.

As virtual accounts become the trillion-naira juggernauts, it is impossible to outlaw but with it being the best toolkit for fraudsters due to poor KYC, CBN will finally bring out an official regulation to delineate what you can use virtual accounts for and minimum KYC requirements to be added to it. Don’t be scared; the regulation wouldn’t kill this baby!

#5 Agent networks will evolve beyond payments and fraud

Agents are the most beloved hated groups in Nigeria today and it’s not difficult to see why. They help you with quick cash and also shaft you in the process. They are the destination for most of the fraud that happens in the banking ecosystem but yet, they keep all of us sane. 

As the CBN and other stakeholders continue to tweak the policies to fight fraud, networks such as Moniepoint, Opay, and MTN, constantly tired of being vilified, would start evolving what you can do at an agent’s point of service beyond cash. What about getting a personal loan? Or taking delivery? Or verifying your NIN and BVN? Or this? Or that? This would work as long as the agent can make a fat margin!

#6 Open banking will go live (I’m always wrong, maybe one more time?)

Ogun Lakaye told me that if I predict this one more time, he will push the CBN to make open banking commence. This time around, I have a strong feeling that open banking will finally go live. I mean I rubbed the genie bottle, and it felt really warm. How could I be wrong?

#7 Virtual accounts go to Africa

Tons of Nigeria fintechs have made forays into Africa – LemFi, Flutterwave, Paystack*, the list goes on. Most have gone on to rule with money remittances and a few like Paystack have had a decent success with payments with cards. 

But if you stepped back and asked, why wouldn’t the best thing in Nigeria be exported to these countries? 

As the margins continue to dry up and the need to grow continues to put pressure; expect Nigerian fintechs, or startup founders from other African countries who have made more than enough trips to Nigeria, to launch virtual accounts.

#8 Someone cracks contactless payment 

Contactless payments are next to godliness; just tap and go (to heaven, I guess). I honestly believe that if done well, it can 3x payments in Nigeria and other countries easily. 

For contactless to work, it must be super-fast, work offline, and not ruin the banks or fintechs. 

This has been the Golgotha where all the nice ideas are dying. However, I expect some of these smart African fintechs to break through this year. After all, where will the next growth potential come from?

#9 Nigerian startups start leveraging global opportunities  

The Nigerian economy has been shattered to pieces although there some flashes of light are appearing at the end of the tunnel. Hopefully not from barreling trains. 

As the economy bites, I expect some Nigerian startups to stop trying to survive but switch into using the cheaper cost of service delivery into a competitive advantage. And those who care about quality would succeed.

#10 Remittance fintechs stroll into hot soup

The margins on typical fintech services are now so thin my barber considers it super dangerous using it to shave me.

So, what are they doing?

Practically every fintech is either in remittances or planning to do so in 2025. Most of them will fail.

Until they discover that the remittance business has more minefields than the border of Ukraine and Russia. This means many of them will not be vigilant enough when bad actors use them to ferry fraud and terrorism money with regulators from the US all the way to Abuja fining most of them; sacking some of them; and a few might even get jailed. 

I mean, how many remittance businesses can Africa support?

Wondering what happened the previous years and the predictions? Read about my takes for 2018, 2019, 2020, 2021, 2022, 2023, and 2024.

10 Predictions for Digital Payments in 2020

2019 was an interesting year for payments globally, and our dear Nigeria wasn’t left out of the parte. But 2020 would be even much more exciting as many of the payments food that got on the fire last year would be served piping hot at the start of the new decade. 2020 would be lit!

As usual, I would be trying out my hands in seeing the future even if I desperately need a pair of glasses to see the tip of my pointy nose in the real world.

So, here’s the third annual prediction of the payments ecosystem in Nigeria. My predictions are always on point: most of them would never happen, and I’m no better than a new age Babalawo. But then who cares?

Let’s dive right in!

#1 Despite CBN’s push, commercial banks won’t crack retail credit

If you didn’t skip Economics 101, you would know that retail credit drives consumption within an economy. Our Nigerian bankers know as well, but maybe they just don’t give two flying horse legs. The CBN has been pushing them with stringent regulatory measures but you can’t give what you don’t have. Our bankers are mostly of the Shashe type and there isn’t a shred of retail DNA in their body. Come December 2020, the drive for retail credit would only have been marginal with banks turning their backside to collect the cane that the CBN would be using to whoop them for not expanding credits

#2 Account-based payments explode. Rapidly overtakes card payments online

Card payments suck in Nigeria, and it isn’t a secret and using accounts to make payments for services have been the mainstay of Instagram and Whatsapp commerce in Nigeria for almost 5 years. But automating and wrapping this around with some beautiful APIs would go mainstream this year. It would touch at least 50% of all card payments. How we will confirm if this prediction is accurate or not is anyone’s guess.

#3 MTN gets a PSB license. Trouble ensures for bankers

MTN has been dancing around financial services for as long as chicken lacked teeth. Last year they got the super agents license and they are already doing something with it but it seems their PSB license application has more dust on it than all the sands at Eleko Beach. But give it to MTN, they don’t give up easily, so expect that somewhere and somehow, they would meet the requirements and get their PSB license. Then trouble ensures for all bankers.

#4 Monthly interbank transfer hits 300m/month and it would be fueled by cheap low-value transfers

Last year, I predicted that interbank pricing would crash; the CBN didn’t disappoint. Now that you can now do transfers as low as N10 a pop, start seeing crazy emergent behavior where it’s now way cheaper to use your app or USSD to send N250 for bread and moin-moin than taking Keke Marwa to the nearest ATM. 

#5 Opay will be one of the top ten banks in Nigeria

Everyone seems to be screaming about how the Chinese African juggernaut has ridden roughshod over GoKada and Max.NG. What they haven’t paid attention to has been the massive growth of the payment infrastructure backing it. In 2017, the first thing Opay did was buy the derelict Paycom mobile money which has now grown from nothing to becoming the seventh-largest player on the interbank market. In 2020, Opay will push massive retail credit, offer better rates for investments, and their size means money stays within their ecosystem than move out. Expect them to get a seat at the Banker’s Committee soon. And if they ain’t invited, they would buy one of the commercial banks.

#6 CBN kickstarts Open Banking

APIs rule the world and the last walls erected by banks against the onslaught customers integrating their bank services into other apps are crashing down with open banking APIs. Nigeria has been slugging it since 2017 but this year, CBN will back it with a directive and possibly adopt the standards being done by Open Banking Nigeria (disclosure, I’m a trustee at Open Banking so this is as much as a prayer and as a prediction)

#7 Agency banking becomes successful as the number of agents hits 600K

My good friends at SANEF had an amazing 2019; they did multiples of what they started the year with. The growth of adoption would see agency banking exploding to over a million agent touchpoints. The vast agent banking network would drive the emergence of new payment products and business models from fintechs. But but but, don’t dance too fast, this would be dominated by MTN as they are pushing more infrastructure and agent recruitment spend that all other super agents, combined. Those guys don’t play around!

#8 A heavy hitter launches a digital bank, eclipses all the struggling existing small players

Many players have tried to crack the digital bank nuts, but it has been mostly eggs thrown at walls just to pull it down. If you call yourself a digital bank in Nigeria today, you are probably too small to be just a little over insignificant. But come this year, someone (probably not a Nigerian entity) puts money down to end this argument and launches the Monzo of Nigeria. But it wouldn’t be any of the players we have now.

#9 A prominent international player buys a major fintech (think Flutterwave, Paystack and not Interswitch)

Visa just plopped $200m to get 20% of Interswitch but doesn’t own it and would have to share the crumbs and strategies with other institutional investors. This year, however, a big hitter would come for any of Flutterwave, Paystack, or even some of the lesser-known but kicking-it fintechs.

#10 Whatsapp decides to launch the next payment play in Nigeria using Facebook Pay, trouble starts for all fintechs

Whatsapp would land forcefully in Nigeria as it’s first foray to own payments within the African ecosystem. After all, if the only massive growth potential left in the world is in the SSA, why not start from the palace of the king of Africa?

#11 The one prediction 100% to come true

Most of these predictions are at best an educated guess at what could happen, which isn’t better than a bunch of bananas trying to eat a monkey.

Wondering what happened the previous years and the predictions? Read about my takes for 2018 and 2019.

10 predictions for digital payments in 2019

2018 was an exciting year for payments in Nigeria. Tons of cash came in as international investments; interbank transfer crossed 700 million transactions, even mCash had a little showing. Of course, the bitcoin bubble made a loud burst with many licking their wounds.

As usual, the following are my 10 predictions for 2019. They are mostly influenced by my understanding of the industry, discussion with various stakeholders, and my penchant for foolery. While these 10 predictions could be a guide for you, rely on them at your own risk.

#1 Interbank transfers overtake ATM cash transactions
Come April 2019, for the first time ever and every month forever after, Nigerians will do more interbank transfers (using USSD, mobile, and online banking) than they collect money from ATM machines. Interbank has seen a steady 100% annual growth over the last few years and is poised to eclipse other payment methods as more bank customers gravitate towards USSD or can afford smartphones.

#2 Payment Service Banking flops
The euphoria around Payment Service Banks (PSB) is unfounded as it is more about financial inclusion than fancy mobile or digital banking. Nevertheless, the poison pill of 22% CRR and 75% deposit with CBN as Treasury Bills is marking this as dead-on-departure. While a lot have applied, only a few will launch. MTN will find that it’s a different kettle of fish and would struggle significantly.

#3 SANEF becomes a surprising success
Shared Agency Network Expansion Facility is a massive N32B undertaking by banks and NIBSS to haul in 30 million financially excluded Nigerians into the financial ecosystem. While it has been on for months with little to show apart from daily adverts by NIBSS, there appear to be unseen moves to make it a success. For example, the adoption of a common API standard for account opening would help the super agents get to the market faster. The appointment of Ronke Kuye, a veteran of payments and a co-founder of CeBIH, to run SANEF is a significant step in the right direction.

#4 A massive data breach or fraud hits some fintechs
Some months ago, someone found exposed data about Arik customers which included card details, phones, and emails. This discovery underscores how pervasive the security lapses have been for technology companies worldwide. When you hear about likes of Google, Facebook, and Yahoo having breaches, you know it’s a matter of time that a Nigerian bank, a fintech, or government agency is walloped. This time around, it would be a hit so hard they cannot sweep the stories under the carpet. By the way, some of these frauds would be done by internal teams.

#5 CBN clamps down on errant fintechs
After the embarrassing frauds and data breaches, CBN will go into a knee-jerk reaction and go after banks and/or fintechs who do not have licenses. A lot of apps will disappear with many investors dollars following the pipe into the drain.

#6 Interbank transfer becomes N20
CBN will update its rules to force banks to reduce their interbank transfer payments to N20 a pop. Bill payments and others will not change though.

#7 Micropayments become free
Part of the CBN rule would say that transfers below N1,000 should not be charged subject to a maximum of N2,000 per day to engender financial inclusion and cashless payments. Customers will rejoice, and I will throw a party (just make sure you RSVP). Before you think I am mad, just remember that CBN made ATM withdrawal free in 2013 and only put a cap of 3 free transactions when banks went begging with their grandmothers. With the cost of interbank transfer down to N20 or even zero for transactions of N1,000 and below, micropayments will explode. Now you can pay for Agege bread with N50, and you won’t get charged.

#8 International players go big
WhatsApp finally figures out how to connect your bank account (for some banks) to your app so you can now transfer funds instantly to anyone. And guess what, they will do it so well and so seamlessly that you wonder if our banks have been playing.

#9 CBN does an about-turn on the new licensing regime
The Central Bank of Nigeria recently threw some gasoline into the fintech fire when it proposed to create 3 licensing bands of up to N5B capital requirements. Since then, everyone has been snipping at CBN’s heels.

#10 Someone hacks AI for banking
A smart bank finally figures out what to do with the mess that WhatsApp banking. Instead of the rubbish flow, you will now be able to chat using natural language. I mean, if you can talk to Alexa in Ijesha accent with all the glory of “H factor” and it recognizes your voice, why can’t you chat with your bank WhatsApp and say “transfer N15,000 to Silifa” and it gets done?

Wondering what happened the previous years and the predictions? Read about my takes for 2018.