August 10, 2022
Why QED invested in TeamApt
Most payments in Nigeria, estimated at around 80 percent, are still done in cash. It’s a remarkable figure when you consider that Nigeria is a heavily carded country where the majority of residents with a bank account hold at least two debit cards.
Offline payments represent one of the biggest challenges – and, simultaneously, biggest opportunities – in Nigeria’s financial services space.
In a country like Nigeria where there are roughly nine ATMs per 100,000 people – a number that can be drastically lower in the inner, more rural parts of the country – this presents a complex payment problem nationwide. Simply put, the penetration is not there.
For comparison, Canada, which has one of the highest concentrations in the world, has 210 ATMs per 100,000 people. Based on a study of 110 countries with data provided by The World Bank, the average is 61 per 100,000 residents.
When you combine Nigeria’s lack of ATM penetration with a secondary issue of a general lack of card acceptance, the opportunities for digital disruption are plentiful.
The challenge has always been on the merchant acceptance side. This problem is multi-faceted.
- Most merchants are unbanked so the banks can not distribute POS devices effectively.
- Existing POS devices have very bad reliability.
- Merchants prefer cash since they mostly pay themselves in cash which leads to a vicious cycle of a lot of people having cards but mostly using cash as a means of payment.
Tosin Eniolorunda and his team have steadily built an impressive payments network across the country over the past five years. They already process payments for more than 400,000 merchants and some of these merchants also serve as “human ATMs”, helping more than 1 million customers across the country pay in cash into their bank accounts or receive cash locally when needed. A good use case for this may be for your car service at a local store in Kano – you can take out some cash next door with a TeamApt agent.
Processing more than $100 billion annualized run-rate transaction value is what we call Act 1.
Act 2 involves layering more sophisticated financial tooling such as invoices, payroll and credit to all these businesses. These reasons powered our investment in TeamApt.
Being able to enable a growing digital form of payments for merchants and consumers in Nigeria is exciting, but being able to deepen the financial capability of these merchants and provide them with everyday tools and credit they need to run their businesses will be profoundly impactful.
Why now? The more time I spent with Tosin and the team at TeamApt, the more we invariably talked about all of the issues that small businesses and merchants face across the country.
Payments are critical, but so is having access to credit, being able to balance their books and being able to bank effectively. To solve the growing needs, you need to not only help them collect money, but you need to help store it, manage it and give them access to it in the most convenient manner possible.
Over the past few months, I have been impressed with the team’s focus on execution as well as customer obsession across the entire product spectrum. What they’re building today will help shape the future of payments in Nigeria forever.