Nigeria’s mobile money transactions have grown nearly 30-fold over the past five years. Between January and July 2020, mobile money transactions grew from N1.37 trillion to N41.54 trillion in the same period in 2024, according to data from the Nigeria Inter-Bank Settlement System (NIBSS).
Mobile money transactions rose by 2,472.75 per cent to 1.64 billion in 2023 from 63.79 million in 2020. Despite boasting 17 companies licensed by the CBN as mobile money operators (non-bank-led), this growth has been driven by Chinese fintech companies Opay and Palmpay.
“OPay and PalmPay are the most prominent non-MNO-led mobile money providers and have gained significant market share in Nigeria since receiving their MMO licence,” stated GSMA, the global telecom industry body.
They achieved this by tapping into Nigeria’s mobile boom, offering free and fast transfers during their early years and then heavily discounted transfers as they matured. They further gained credibility during a failed Central Bank of Nigeria naira redesign and withdrawal policy in 2022.
Humble Beginnings
OPay began operations in 2010 as PayCom Nigeria Limited, a mobile money platform incubated by Telnet (Nigeria) Limited. In 2018, it was acquired by Opera, owned by Chinese billionaire Yahui Zhou, and rebranded as OPay.
PlamPay launched later, entering the Nigerian markets in 2019 after raising a $40 million seed round led by Chinese mobile phone maker Transsion. As part of the investment, PalmPay was preinstalled on Transsion’s mobile brands Tecno, Infinix, and Itel.
Market Entry Strategy
OPay gained its way into the hearts of many Nigerians by becoming a super app after Opera’s takeover. The company operated numerous services, including ride-hailing at cheap rates. According to reports, its monthly active users surged from around 100,000 in April 2019 to 5 million a year later (which rose to 30 million in June 2023).
At its peak, the company provided 10 million weekly rides across 18 cities while expanding its agent network to over 500,000 agents. By July 2020, it shut down its other services to focus exclusively on fintech.
PalmPay, leveraging Transsion’s dominance in the smartphone market, rapidly grew its user base, now at 35 million. By 2023, Canalys, a leading global technology market analyst firm, revealed that Transsion and Xiaomi accounted for 85 per cent of the smartphone shipments into Nigeria in the third quarter of 2023.
In 2019, Greg Reeves, PalmPay’s chief executive officer, said, “On channel and access, we’re going to be pre-installed on all Tecno phones. You’re gonna find us in the Tecno stores and outlets. So we get an immediate channel and leg up in any market we operate in.”
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By investing in an extensive agent network of around 500,000 agents, PalmPay gained a foothold in urban and rural areas.
“These fintechs were aggressive with their approach to penetrating the market. Most importantly is embracing the agent network model where agents can recruit other agents for all of these operators with very good incentives in place, particularly for Moniepoint,” Victor Olojo, former national president of the Association of Mobile Money and Banking Agents of Nigeria (AMMBAN) earlier told BusinessDay.
Free and Cheap Transfers
OPay and PalmPay employed similar strategies to retain customers: free and low-cost transfers.
OPay offered free transfers until June 2023, after which they introduced a minimal charge of N10 after the third transfer in a day. PalmPay implemented the same strategy, introducing the N10 fee after years of offering free transfers.
Both fintechs achieved this by leveraging fundraising. OPay has raised $570 million so far, while PalmPay has raised $400 million. “Their success can be attributed to first their financial strength. Top players must have deep resources,” noted Olojo.
Failed Naira Redesign
In 2023, OPay gathered journalists in its Ikeja office to explain how its IT investments gave it an edge when Nigerians needed cashless terminals. The company pointed out that its agile IT network enabled rapid capacity expansion, surpassing traditional banks’ capabilities.
He said this against the backdrop of a naira scarcity that had almost crippled the economy. In 2022, the CBN announced the release of redesigned naira notes for higher denominations (N200, N500, and N1000) and a withdrawal policy to encourage cashless transactions.
During the implementation of this policy, traditional banks struggled to handle the surge in demand, leading to widespread transaction failures. This allowed OPay and PalmPay to fill the gap. By March 2023, both apps were Nigeria’s most downloaded finance apps, and OPay became the country’s most-downloaded app by October 2023.
“They made payment methods easier, faster, and better, and people began relying on them for everyday things,” said Adedeji Olowe, founder of Lendsqr.
Boosting Financial Inclusion
Both fintechs powered a boom in microtransactions, enabling more transactions to be cashless. “There was a boom in microtransactions when the cashless issue happened,” noted Nosa Oyegun, VP of product and innovation at Kuda.
The growth of these fintechs drove financial inclusion, with more people onboarded into the financial system. “MMOs have succeeded in onboarding unbanked users using lower know-your-customer (KYC) requirements,” GSMA said.
“The future is all about financial inclusion. We want to reach out, especially to the last man. For the people who don’t even use a smartphone,” said Chika Nwosu, the managing director at Palmpay Nigeria. “Our major objective is to use technology to support financial inclusion.”
Nigeria’s mobile money transactions have also contributed to global increases. In 2023, total transactions rose to $1.4 trillion, driven mostly by growth in Nigeria, Ghana, and Senegal, according to Mats Granryd, director general of the GSMA.
