In recent years, Nigerias banking landscape has witnessed a significant transformation. Banks are increasingly adopting local card schemes like Verve, moving away from international giants such as Visa and Mastercard. This shift is driven by evolving consumer behavior and macroeconomic factors.
Before the COVID-19 pandemic, Nigerian fintech companies discovered a simple yet effective customer acquisition strategy: offering foreign debit cards. These cards, often provided at little to no cost, enabled customers to withdraw money from ATMs and make purchases at various establishments. This approach boosted customer spending and increased transaction fees for fintechs.
However, the pandemic brought about changes that altered this dynamic. Restrictions on in-person shopping, cash shortages at ATMs, and a cash crunch in 2023 reduced reliance on card payments. Consequently, bank transfers gained popularity, prompting both fintech startups and traditional banks to reassess their card operations.
Today, nearly all Nigerian commercial banks, with the exception of Guaranty Trust Holding Company (GTCO), have embraced Verve, a card scheme operated by Nigerian payments unicorn Interswitch. First Bank, the countrys oldest bank, has issued Verve cards to over half of its card customers. Chinese-backed fintech OPay and Moniepoint have also joined the trend, issuing 13 million and 4 million Verve cards, respectively.
The nairas devaluation has made switching from international card schemes more appealing, as their fees are charged in USD. Visa and Mastercards pricing structures are complex, with varying fees based on factors such as institution size and region. Financial institutions must also meet stringent requirements, including monthly implementation charges, offshore account maintenance, annual contract renewals, and substantial collateral deposits.
