The two-year-old payments company closed December 2023 with an operating income of ₦2.08 billion. This “reflects the culmination of our strategic investments and diligent efforts in building a sustainable and resilient business model,” a company spokesperson from Hydrogen told TechCabal via email. 

Launched in 2022, the company fully commenced operations in 2023. 

Hydrogen has big ambitions: it wants to build Africa’s most powerful payment business network. It competes with other fintech players such as GTCO’s Squad, Flutterwave, Moniepoint, Stanbic IBTC’s Zest, and Paystack. While it acknowledges the saturated payments market, Hydrogen believes that its approach is different, relying on “a combination of strategic partnerships, technological prowess, and a deep understanding of the market dynamics”.

Hydrogen offers products and services that include InstantPay, Payment Gateway, POS, Card, and Switch services. The fintech hopes to serve a clientele that cuts across the private and public sectors. 

The company claims to have processed approximately ₦15 trillion in transactions across its different channels in 2023. It also launched eight payments products in the same year. 

Five days out of seven a week, most of the over 25 ATM locations are empty because the machines are out of service, out of network, or out of cash. It is the same experience many bank customers face with about 22,600 ATM locations, as Inlaks data show, spread across the country.

Nigeria requires about 60,000 ATMs to meet up with its growing population of 216 million people and a banking population of 106 million adults, according to Tope Dare, executive director of Inlaks, the largest ATM operator in the country, which controls over 50% of the market. 

In 2010, Nigeria had roughly about 7,100 ATMs and the number grew to over 11,000 in 2011 because the CBN mandated the removal of the offsite deployment by banks. This meant that banks would no longer invest in ATMs outside their branches. The CBN seeded the deployment to independent ATM deployers which couldn’t run the project due to the cost. The ban was eventually lifted, allowing banks to invest more in ATMs. The number of ATMs then grew from 11,000 in 2011 to 16,000 around 2016 and 21,000 in 2019. It grew to 22,600 in 2021, where it has remained as of December 2023, an indication that investment in the market has reduced. 

Seventy-six per cent of the total ATMs in Nigeria are deployed by eight banks. Access Bank has over 4,000 ATMs, First Bank has about 3,300, UBA has 2,150 ATMs, Zenith has 2,100 ATMs, GTBank has 1800 ATMs, FCMB has 1,350, Polaris has 1300, and Union has 1,200. A total of 17,200 are owned by these eight banks.

Consequently, there needs to be more ATMs in Nigeria to serve the needs of the banking population, and this has always been the case with Nigerian banking services. 

The estimated branch count of the 24 commercial banks is about 4,500, which is not enough for an estimated 106 million banking population reported by EFInA. The BVN accounts are currently at 60.1 million and active bank account holders are about 135 million. The annual growth rate of ATMs in Nigeria is about 3%-4%, but this has dropped to below %1 in the past two years, as the Inlaks data show. 

Nigeria’s ATM per capita (number of ATMs per 100,000 adults) has also dropped from 16.92 ATMs in 2018 to about 16.15 in 2021. The global standard should be 1,000 ATMs per 100,000 bankable adults. Hence, Nigeria should have about 60,000 ATMs when it is measured against the unique bank customers at 60.1 million. Given the 22,600 active ATMs, there is a deficit of about 37,400 ATMs. As the number of bankable adults keeps increasing and more cards are issued, it is expected that ATMs will decrease in number over time, since the banks are not deploying more ATMs. 

Growth factors for ATMs

In the past, some of the factors that have contributed to the growth of ATM deployment in the country include banks’ profitability. When banks are profitable, they undertake branch expansion and capital expenditure. Banks also deploy more ATMs when their customer base is growing because this means that more cards will be issued, and there will be a need to provide cash and additional ATMs for the customers. Banks that undertake digitalisation initiatives often need to deploy more ATMs. Financial inclusion initiatives also impact the growth of ATMs positively. Banks will also deploy ATMs in areas with improved power generation, this is because the cost of electricity is a major burden for ATM deployment. 

Why investors are looking away from ATMs

Dare says the ATM business in Nigeria is facing its most difficult times due to the high cost of maintenance, growing adoption of other banking channels, foreign exchange crisis, galloping inflation, insecurity, and uncertainty in the ATM policy environment, all of which are driving investors far away from the market.  

In 2016, the exchange rate for the dollar was ₦250. It rose to ₦325 in 2017 and stabilised between ₦330 and ₦360 by 2019. Dare says buying at a rate of ₦380 in 2020 and ₦455 before the Muhammadu Buhari administration left office, impacted the unit cost of ATMs significantly. However, it went from bad to worse when the new government under Bola Ahmed Tinubu dramatically announced the unification of the FX rate, which pushed the official rate to ₦750. The black market price for the dollar is currently above ₦1,500. 

“A machine that we were selling at ‘x’ million naira this time last year, by today we are selling at 3.5x today. This is affecting the hire purchasing cost due to FX. The FX is also dependent on the customs duty and the OPEX. The cost of maintaining ATMs has gone up due to inflation, the cost of transportation, and the cost of spare parts because you have to import spare parts from abroad,” Dare said. 

ATMs are also seeing fewer investments because most investors are paying more attention to other growing electronic channels such as PoS terminals, mobile app transfers, USSD, and other alternative channels consumers use to make payments faster and more convenient. 

“The rapid adoption of digital payment methods is influencing consumer behaviour, leading to a shift away from traditional ATMs in favour of more convenient digital alternatives,” said Olaoluwa Awoojodu, CEO of E-Settlement Limited.

The non-profitability of ATMs is also a big factor for investors. The interchange fee also known as the surcharge fee, is one of the lowest in the world. Today, when a customer visits an ATM he/she is charged N35 after the third transaction. The fee is fixed by the CBN; hence banks cannot change it without approval from the regulator. For investors, fixing the fee does not make sense given that the unit cost for processing ATM notes in Nigeria is one of the highest in the world. Today, it takes a minimum of 150 notes to process the equivalent of $100, said a bank CEO who wanted to remain anonymous. 

According to Dare, to revive the ATM business, the government should consider offering a tax concession. Presently the customs duty on ATMs is over 25%, whereas the duty on solar products is 5%. ATM policymakers also need to de-emphasise cash availability in ATMs and champion the upgrade of the machines to provide cardless payment innovations such as Near Field Communication (NFC). NFC is a short-range wireless communication technology that allows devices to exchange data without a physical connection. Users can initiate a transaction by tapping their NFC-enabled smartphones in front of the contactless reader on the ATM. This connection facilitates secure data transfer between the user’s mobile banking app and the ATM, eliminating the need for a physical card. 

“You can also have a convergence of your mobile to the ATM where you can initiate a transaction in your phone, and you can go to the ATM to consummate it. ATMs should go beyond the regular functions of cash dispensing to more advanced and innovative solutions and contactless payment at minimal costs. ATMs will not die in any country as long as cash is king,” said Dare. 

“Our vision is to build Africa’s most powerful payment business network. The real play for Hydrogen is the infrastructure,” Kemi Okusanya, the company’s CEO, told TechCabal. 

Although Hydrogen was launched in 2022, Okusanya says 2023 was the company’s “real first year.” 

It has launched eight products and claims to have processed approximately 15 trillion Naira in transactions across its different channels in 2023. Like most payment companies, Hydrogen earns a fee per transaction on its platforms. 

“A time will come when one in every three transactions happening in Africa will have something to do with Hydrogen,” she said. Hydrogen’s license allows it to operate across the entire value chain, offering services like processing, switching, and super agency. 

Though Hydrogen says its play is infrastructure, it competes with fintechs such as GTCO’s Squad, Flutterwave, Moniepoint, and Paystack in the payments market. Squad, for instance, crossed ₦200 billion in monthly transactions in January 2023. Data shows that digital payments in Nigeria have been on the rise in the last half-decade.

Hydrogen has two arms: the merchant business and the switch and card business. On the merchant side, Hydrogen caters to small and medium enterprises (SMEs) and large corporations with tailored solutions. According to the company’s head of merchant business, Zainab Abu, these solutions include POS terminals, Instant Pay, which provides real-time transaction visibility across multiple outlets, a payment gateway that allows merchants to receive payments via their website, and a payment link.

Since launching the merchant business in April 2023, Hydrogen has onboarded 11,000 active merchants across every state in Nigeria. Its transaction volume grew to billions within the first two months of operations, and in January, the merchant business processed 40% of last year’s total volumes.

Abu says Hydrogen POS’s competitive advantage is that it allows other payment types beyond cards, such as bank transfers. Hydrogen will also compete offline against other fintechs that offer POS devices. Last year, Paystack launched virtual terminals, a new product that allows merchants to accept payments with bank transfers for multi-person businesses. 

Hydrogen acts as a third-party processor for card transactions on the card and switch business. It offers interbank transfer, bulk payments, and 3D secure, a second-level authentication for card transactions, according to Fiyinfoluwa Olorunsola, head of card and switch at Hydrogen.

Hydrogen’s card and switch business is focused on the financial sector, especially traditional banks and fintechs. “We handle the processing side of things. We process transactions for about 50% of the FUGAZ banks and top fintechs.”

Yet, Okusanya admits it’s still early days. “There is so much in payments. You think you know it, but you discover a new thing.”

“This means you must request TID for each merchant with their details and wait for NIBSS to generate it before they can assign a terminal to that merchant,” one person familiar with the CBN’s plans said. 

Before now, mobile money operators like Opay or Palmpay typically requested TIDs in bulk to assign terminals quickly, but recertification will mean acquirers (banks and mobile money operators) have to register each TID separately. Registration requires the provision of an address, BVN or Tax Identification Number (TIN), business name, and F1 Code of the acquiring bank. 

The validation of a POS terminal delivered to a particular location would be handled by licenced Payment Terminal Service Providers (PTSPs) like Interswitch, ETOP, or CitiServe. 

“Banks will typically select and map each terminal registration with a particular PTSP that sets it up, deploys, and continues to support the merchant. PTSPs are also the bridge to terminal procurement from the OEM as banks/acquirers were not allowed to engage directly with OEM for procurement,” a product manager at a fintech startup said. 

While there is no timeline given by the CBN for the commencement of the recertification exercise, TechCabal learned that the Nigerian Interbank Settlement System (NIBSS) was mandated by the CBN to come up with a geofencing plan that ensures that terminals are not used outside the locations where they are registered. The terminals, once certified, can only be used in the location where it is deployed. If the POS terminal is used outside the address or location, NIBSS will disable it.

While the timeline of recertification is unclear, mobile money agents will be asked to provide additional information as part of their KYC to enable them to operate Tier-3 accounts. A Tier-3 account allows transactions of up to ₦1 million, and customers can hold up to ₦1 billion in deposits. 

Before now, agents were allowed to operate any level of tiered accounts provided that proper KYC was done and necessary documentation was achieved. Tier-1 accounts are the most popular among agents because they require minimal documentation to open and operate. The recertification is likely to push agents towards operating more Tier-3 accounts. 

The plan also mandates the audit of agents and review of their processes by acquirer banks, Super Agents, and MMOs to align with the proposed recertification program and beyond. 

Mobile money operators who spoke to TechCabal on condition of anonymity said they are still trying to get clarification on some of the features of the certification exercise for POS terminals.

At first glance, Africa’s B2B payments sector looks like a saturated market. Many high-profile companies have emerged over the years to process payments on behalf of global merchants. Yet, despite its rapid growth in recent years, Africa’s payments sector is barely scratching the surface. 

Africa’s payment landscape is diverse and multifaceted, marked by the lack of widespread card penetration and the preference for localised payment methods over traditional credit or debit cards. The continent has the lowest credit card penetration in the world (3%). This makes the reliance on cash a persistent challenge to the growth of digital payments in Africa.

The fragmentation and diversity of Africa’s payment sector, diverse payment preferences, and varying technological infrastructures across different regions are all challenges the sector is still plagued with and act as deterrents for global merchants to accept local payment methods. 

The mix of payment methods varies from country to country. For instance, in Nigeria, account-based transfers and debit cards prevail. In Kenya and Ghana, where there’s lower bank penetration, mobile money reigns, and in South Africa, cards are more popular.  

With the low credit and debit card penetration, and the regulatory barriers of payments across the continent, alternative payment methods (APMs) are filling the financial inclusion gaps, catering to the diverse needs and preferences of its population spread across 54 countries. Many African consumers now prefer to transact through various alternative payment modes, such as mobile money, bank transfers, digital wallets, and cash-based systems because of the ease of making payments without the hurdles of traditional digital banking systems. Africa now accounts for nearly 70% of the volume and more than half of mobile money users worldwide. 

At a recent edition of TechCabal Live in partnership with EBANX on Friday, November 17 Juliana Etcheverry, Director Of Strategic Payment Partnerships & Market Expansion, EBANX noted that “The rise of the use of APMs is fueled by the instantaneousness of it. People want to be able to make instant payments and not have to jump through multiple hoops.” At the event, the untapped opportunities in Africa’s digital payment market, with a focus on the learnings from Latin America and the similarities in both regions were discussed.

The rise of APMs in Africa holds immense promise for the future of digital payments on the continent and its benefits are far-reaching. One of the most significant hurdles for international businesses entering African markets has been the challenge of adapting to local payment preferences across all countries.  These payment methods bridge the gap between global merchants and African consumers, fostering greater inclusivity and accessibility in the digital marketplace. Businesses can now effectively navigate this intricate landscape, offering consumers the flexibility to transact in ways that resonate with their habits and lifestyles.

Additionally, APMs empower small and medium-sized enterprises (SMEs) by providing them with efficient and cost-effective payment solutions, thereby fueling economic growth and entrepreneurship. 

APMs contribute significantly to financial inclusion, bringing previously unbanked populations into the formal financial ecosystem. This was reechoed by Wiza Jalakasi, Director, Africa Market Development, EBANX on TC Live. “APMs bridge the gap between the online and offline world, as people can now make digital payments through the use of vouchers, mobile money, etc,” he said.

Moreover, the evolution of alternative payment methods in Africa paves the way for innovation and adaptation. Companies that invest in understanding and integrating these payment methods position themselves at the forefront of innovation, gaining a competitive edge in an ever-evolving market. By aligning with local preferences, businesses can build trust, enhance customer loyalty, and establish sustainable, long-term relationships with African consumers.

By 2025, at least 70% of all online transactions across the continent are expected to be done with alternative payment methods, such as digital wallets, mobile money, and instant payments. The rapid rise of APMs in Africa points to one thing: these methods will power Africa’s digital economy.

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This article is part of the TechCabal Live series brought to you by TechCabal in partnership with EBANX. EBANX is a digital platform that leads in providing alternative payment methods like digital wallets, instant payments, mobile money, and vouchers. 

In Ghana and Kenya, mobile money systems, particularly those using offline channels like USSD, are popular and supported by customers over card-based systems. This strong preference aligns with the percentage of people with mobile money accounts at 60% in Ghana and 69% in Kenya. However, while USSD is popular, it has been cited as a barrier to ease of use in payments. “Complex USSD menus and failed transactions are particularly detrimental to use,” said AfricaNenda, a digital payment strategy organisation in its inclusive instant payment systems (IIPS) report.

Cross-domain instant payment systems facilitate interoperability between banks and non-banks, enabling transactions across both bank and mobile money accounts. While app channels follow USSD in terms of popularity, they introduce friction points like access to smartphones and internet connectivity, the adoption of which stands at 51% and 43.2% respectively.

There is a growing acceptance of quick response (QR) codes as another channel. Cross-domain and bank IPS offer the broadest array of channels, whereas mobile money instant payments typically favour agent, USSD, and app channels. According to AfricanNenda, which released an instant payments systems (IPS) report in November 2023, this diversity shows the evolving financial services ecosystem in Africa.

Per AfricaNenda, electronic money (e-money) instruments are also popular, with widespread support from mobile money and cross-domain instant payment systems. Cross-domain systems also use commercial money instruments like credit and debit electronic funds transfer (EFT), while bank IPS focus on credit EFT, with debit EFT as a secondary instrument. This diversity underscores the varied payment methods in use across different payment systems.

“For an IPS to be a cross-domain system, it must have a switching capacity between commercial money instruments (such as debit electronic funds transfer (EFT), credit EFT, and domestic card instruments) and e-money instruments. Operators use one of two approaches to achieve a cross-domain IPS,” said AfricaNenda in the report.

IIPS is important because the demand for instant digital payments is growing. In 2021, 50% of Sub-Saharan African adults used digital payments, up from 34% in 2017. 

Over the last few years, Flutterwave has doubled down on consumer payment services with new products such as Send App and Swap. However, in a chat with TechCabal, the company’s chief sales officer, Ross Haider, said that enterprise services remain the most significant revenue driver for Flutterwave. “Based on our internal numbers, enterprise probably leads the way, and consumer is catching up. So it won’t be unfair to say that probably by the middle of 2024, both will be driving similar numbers,” Haider said.

Flutterwave was founded in 2016 by Olugbenga ‘GB’ Agboola and Iyin Aboyeji to provide payment solutions to African merchants and everyday consumers. The business has scaled to several countries and supports other companies, including MTN and ride-hailing company Uber. But the company has attempted to go big in consumer payments. It launched Barter as a super app offering everything from airtime recharges to international remittances. But the product has struggled since it launched despite Flutterwave’s best efforts.

In 2021, Flutterwave introduced Send, an international payments app that debuted with a notable partnership with Grammy-award-winning artist Wizkid. Over the last six months, and thanks to recent reforms by the Nigerian government, Flutterwave is reporting faster adoption on Send, its CEO told TechCabal.

As listed on its website, Flutterwave offers a range of payment products for individuals, startups, and businesses. Under the Enterprise segment, its offerings include helping companies to accept online payments, cross-border payouts in different currencies, point-of-sale devices, virtual cards for business expenses, no-collateral loans, and recently Swap, a new product digitises the process of getting foreign exchange for Nigerians with the backing of Nigeria’s Central Bank. For the consumer segment, products include the remittance platform Send App, Afritickets; an end-to-end event ticketing platform that powers concerts, festivals, fashion shows, and other lifestyle needs; Swap, and Tuition, a product that allows African students to pay their international school fees in their local currencies.

Flutterwave’s plan to float an initial public offering (IPO) has been in the works since last year but was delayed by the company’s regulatory troubles in Kenya. In August, Bloomberg reported that the fintech is still pressing ahead with the plan, though its CEO Agboola admitted that “the markets aren’t great right now,” a telltale sign that the listing could be slowed down. “When it is time, we will let you know for sure. Currently, we focus on customers, revenue, experience, and digital market expansion,” Agboola told TechCabal at an event in September.

Haider said going public won’t affect the company’s sales and growth. “I don’t have any timeline on when or how the IPO would look, but I can tell you that from a growth perspective, we have seen tremendous growth within the organization. It [the IPO] doesn’t impact our sales operations in any way,” he told TechCabal.

Editor’s note: an earlier version of this story referred to Send App as a payments app, it has now been corrected to a remittance platform. Also, Flutterwave’s event ticketing platform has been included.

In today’s globalised world, it’s increasingly common for Nigerians to work with international clients or companies, leading to the need to receive foreign payments. However, the Nigerian peculiar restrictions and strict modalities on the process of receiving foreign funds can be complex and discouraging. In this article, we’ll explore some key and easy ways Nigerians can efficiently receive foreign payments.

1. Bank wire transfers

This traditional method involves sending details of your bank account to your overseas client or employer. They can then initiate a wire transfer to your Nigerian account. However, your bank account needs to support international wire transfers and be prepared for fees and potentially longer processing times. Such accounts are called domiciliary accounts. You can walk into any bank of your choice to open one. 

2. Payoneer

Payoneer is a popular choice for freelancers and online businesses in Nigeria. It offers a multi-currency receiving account that allows you to receive payments in various currencies, which can then be withdrawn to your Nigerian bank account as naira. Sign up for a Payoneer account, receive payments, and transfer them to your local bank. 

3. SendWave

You can tell your sender to use the SendWave app which is available on Google Play Store and choose Cash Pickup as your means of collection. You will need to provide them with your legal name as it appears on your BVN and your phone number too. These will be used to process the payment from their end.  Once the payment has been processed, the sender will receive access codes (an OTP and a Voucher Code). They are to share the authentication codes with you and you can take these codes along with a valid ID card to any Access Bank, GTB, Zenith, or Fidelity bank branch, and cash out your payment. 

If you have a domiciliary account, you can use it to receive foreign payments in Nigeria using SendWave. Just tell your sender to follow these steps: 

• Download the SendWave app from your app store.
• Sign up and verify your identity.
• Link your bank account.

After they have done the above, you simply provide them with your Nigerian Domiciliary account number. Once they send it, you’ll get it in your account without hassle.

4. Cryptocurrency

Bitcoin and other cryptocurrencies offer an alternative way to receive international payments. You can provide your cryptocurrency wallet address to your clients, and once the payment is made, you can exchange the cryptocurrency for Naira on local exchanges.

5. Remittance services to receive foreign payments

Services like Western Union and MoneyGram allow you to receive foreign payments in cash at their local branches. Your client can send money directly to one of these service providers, and you can pick it up after providing necessary identification.

Final thoughts on how to receive foreign payments in Nigeria

Receiving foreign payments in Nigeria is achievable through various methods, each with its pros and cons. Choose the method that best suits your needs, taking into account factors such as currency, fees, and processing times. With the right approach, you can smoothly handle international transactions and expand your global business opportunities.

Nigeria’s financial regulator on Tuesday announced new guidelines for digital payment providers who offer contactless payment solutions. Contactless payments broadly refer to transactions where users pay by simply tapping or waving their payment devices at point-of-sale terminals. It is also called proximity payments. 

Under the new rules, users can tap or wave their devices (including smartphones and cards) that are enabled with contactless technology to make payments without needing to input a PIN to confirm the transaction. But such transactions will be limited to ₦15,000 ($19.65) for a single payment or ₦50,000 ($65.5) daily.

Contactless payments are powered by radio frequency identification (RFID) or near-field communication (NFC) technology both of which allow enabled devices to initiate and authorise payment transactions without additional authorisation confirmation from the user.

EMVCo—named for the organizations (Europay, Mastercard and Visa) that established it— works with payment industry stakeholders globally to set technical standards for smart payment cards and the POS readers that accept them. 

The COVID-19 pandemic is credited for accelerating the use of contactless payments.  In 2020, the WHO urged a switch to contactless as part of measures to help slow the spread of COVID-19. In response 30 European countries raised their limits on contactless payments in the same year. In 2021 the UK contactless payment limits again to £100 in October 2021, making UK consumers among the world’s biggest spenders without having to confirm their identity.  Three-quarters of all Mastercard transactions in Europe are contactless. In the UK, Visa says the figure is as high as 80% of in-person payments.

Nigeria’s contactless payments rules place the burden of fraud with acquirers (i.e. the bank of the payment recipient), issuers (i.e. the bank of the customers) and merchants (the business) who offer contactless payment channels. Per the guidelines, they will be liable for fraudulent transactions “arising from their negligence and/connivance.”  In addition, the guideline specifies that contactless payment be only enabled for users who have Bank Verification Numbers (BVNs). Contactless transactions that are higher than the limit will require additional authorisation in the form of a PIN, mobile code or biometric identification.

Regulators in the US and Ecuador do not place any limits on single contactless transactions.

To combat fraud Nigerian fintechs have moved to include ID verification as part of the onboarding process instead of simply placing limits on transactions. Paga, founded in 2009 recently announced that it would require all customers to pass additional ID verification regardless of their KYC level.

Nigeria’s central bank said it considered the risks associated with contactless payments before limiting how much users can make with contactless payment methods. Limiting transaction amounts on contactless payments is a standard fraud mitigation risk. There is evidence that it works. According to the data analytics company, FICO, “data from UK Finance revealed that in 2020 there was a total of £574 million lost through card fraud. Of this, only £16 million represented contactless payment fraud. Against a total of £9.46 billion worth of contactless transactions, that equates to 1.8p worth of fraud in every £100 spent using contactless technology.” 

South Africa leads the way in contactless payments in Africa. In January Tech Central reported that more than half the customers of First National Bank (FNB) use contactless payments. “Consumers have shown a strong preference for contactless payments using their contactless-enabled cards or smart devices,” said Ashley Saffy, head of business development at FNB South Africa.

Uruguayan-born payments company, dLocal has secured payment service provider licences from the Central Bank of Kenya and the National Bank of Rwanda. dLocal also recently secured a similar license from the Central Bank of Nigeria.

Founded in 2016, dLocal is a cross-border payment processor that connects global merchants to emerging markets. The payments company says it is committed to Africa because merchants are signalling strong demand for reliable and secure digital payment solutions across the continent. In August 2022, a McKinsey report pointed out that African fintechs have an average penetration of between 3% and 5% (excluding South Africa) in terms of revenue generated by traditional financial services providers like banks. The consulting firm predicted that revenues for African fintechs could grow 800% by 2025, from an estimated $6 billion in 2020. 

All told financial service revenues from Africa are expected to grow 10% per year until 2025. This growth could generate revenues of up to $230 billion, McKinsey said. Payment services and wallets are two of the fastest growing segments accounting for 20% each of expected revenue growth. It is this growing market that dLocal seeks to tap into.

By acquiring payment services licences in Nigeria, Kenya and Rwanda, dLocal can now process local payments in all three countries, without needing to rely on a third-party provider, while ensuring regulatory compliance. “Africa is forecast to surpass half a billion e-Commerce users by 2025, which will have shown a steady 17% compound annual growth rate (CAGR) of online consumers for the market,” Adebiyi Aromolaran, Head of Expansion Africa at dLocal explained. According to McKinsey, online payments acquiring, gateways and aggregation are whitespaces in the payments landscape. 

dLocal is betting that shifting consumer habits (to online services) presents an opportunity. “The continent continues to show tremendous untapped e-Commerce opportunity, and people in Kenya, Nigeria and Rwanda are encouraged to use more and more digital payments every day by new regulations and payment opportunities,” Aromolaran said.

dLocal allows international merchants like Uber, Microsoft, Booking.com and Shopify to accept cash, mobile money, Visa and Mastercard cards. As well as locally issued debit, credit and prepaid cards from one direct API, platform and with one contract. Cards, cash and mobile money are the dominant forms of digital payment in Africa.

“The regulatory payment framework in African emerging countries varies immensely. Receiving payment service provider licenses in all three countries, Kenya, Nigeria, and Rwanda are great milestones in our mission to be a truly local payment partner for our global merchants, and the licenses advance our objective to leverage the scalability of our technology to broaden our geographic footprint in Africa,” Adebiyi, noted. By prioritising expansion in Africa, dLocal is offering an alternative to local payment providers like MFS Africa, Cellulant, Paystack, and Flutterwave. That the company sees an opportunity for itself in Africa perhaps puts paid to the argument that the fintech space in Africa is overcrowded.

dLocal which is the first Uruguayan unicorn is listed on the Nasdaq stock exchange. The firm raised (disclosed) funding of $357 million between 2016 and 2021, according to data from Crunchbase. The firm processes payments in 40 countries across Europe, the Middle East, Latin America, Asia and Africa.