Moniepoint, Opay eye expansion as market booms

Two of the market leaders in the Point-of-Sale market are taking steps to expand in the financial services industry to consolidate gains made from the cash crunch. Moniepoint is going into the credit market with loans targeted at merchants, while Opay has announced a corporate rebrand. Moniepoint is also the headline sponsor of the BBNaija All Stars show.

Moniepoint launched Working Capital Loans, a solution it said is designed to help merchants solve capital challenges and keep their businesses running and growing. The announcement follows a growing influx of merchants into the digital payment space.

According to experts, the increasing merchants’ adoption is thanks to the naira redesign policy of the Central Bank of Nigeria (CBN). The policy led to a nationwide naira scarcity that forced mobile money and bank agents to jack up their transaction fees, thereby pushing consumers to card payments, a service merchants were eager to provide.

Merchants on Moniepoint rose to 1.3 million in the second half of 2023, contributing to about 80 percent of the PoS businesses on the platform. The credit product the company is offering is intended to offer merchants a lot more access to financial services than mere PoS support. The Working Capital Loans will offer these businesses a line of credit relative to their capital (or stake) in the business.

The loans are short to medium term, which means borrowers are expected to pay within 7 to 120 days which can be easily and in some cases automatically renewed.

“This way, any merchant who runs his business via their Moniepoint account may have access to a line of credit proportional to the business that passes through the Moniepoint account. The product is already widely adopted by a number of their businesses; supermarkets, fuel stations, etc. and currently has zero defaults so far,” the company said in a statement.

Credit penetration, particularly for small businesses in Africa’s largest economy, remains very low at about 5 percent. Fintech companies like many other financial institutions see these as an opportunity and are positioning to address it.

Also, with the federal government trying to weed out illegal lenders who take advantage of the vulnerability of borrowers to shame them, there is an opportunity for well-established fintech companies like Moniepoint to play in the space. Opay recently said it is expanding its services.

At its fifth year anniversary, Opay announced it was rebranding with a new logo. According to the company, the change represents a promise of a new era with enhanced services, technological advancements, and the aim to solidify its position as the most reliable financial platform in Nigeria. However, Opay has also lost its president, Olu Akanmu, who stepped down on Monday and is moving on to new endeavours.

The target for the fintech companies is mostly small businesses. Small and medium-scale enterprises (SMEs) remain largely untapped by traditional financial institutions because of the risks they represent to the companies. Many small businesses still struggle with access to finance which is critical in buying new equipment, pushing product and service innovations and expanding the business.

“We are conscious of the fact that MSMEs are the backbone of African economies and we are always looking for new ways to help African businesses have access to solutions and tools that accelerate their growth,” said Tobi Amira, vice president of business loans at Moniepoint.

The company said it is willing to provide a percentage capital contribution as a line of credit for the daily running of the business on its platform.

“As at the end of June, we had disbursed $3.3 million, with a gross loan portfolio value of $ 2.4 million,” Amira said. It is expected that the BBNaija All Stars show will bring thousands of new users to the platform. Fintech companies like Abeg App (now Piggyvest), which has sponsored the show in the past, recorded over one million new users.

The successes of Moniepoint and Opay so far make them targets of traditional banks who are reeling from losing customers to these fintech companies. These banks are also expanding their investments in the fintech space. Only recently it was disclosed that Access Bank is the largest shareholder in eTranzact, one of the first fintech companies to list on the Nigerian stock market. The bank owns 37.54 percent of eTranzact.