Paga pulls away from the pack as Nigeria’s m-money market develops – Will offer improved payment choice functionality in September

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Nigeria chose to follow its path on m-money and has not allowed the mobile operators to become direct market players. The market has taken longer to develop but is beginning to get into its stride. Russell Southwood spoke to Tayo Oviosu, CEO and Founder, Paga about new developments in its service.

There are 21 licensed m-money operators in Nigeria but in practice only three who are operating at scale. A number of these licensed operators are doing niche services: for example, one does collections for an FMCG company.

The three main players are Paga, First Monie (First Bank) and eTranzact (Pocket Moni). Paga currently has 4,961,761 subscribers and in December 2014 First Moni claimed 2 million subscribers. So the total subscribers?:”It’s hard to say but this side of 10 million.”

More important is the number of active users, of which Paga has 900,000 active users (last 90 days). 23 million Nigerians have a bank account and half of Paga’s subscribers are banked. So there’s still a long way to go before the market reaches anything like its full potential.

One of the key factors for growth with this type of service is the number and spread of agents. Paga has recently inked a deal with the Post Office to have agents at every Post Office. It currently has 10,104 agents in 35 states, 3,000 of which are in the capital Lagos. Oviosu wants to get to 30,000 agents by 2018.

Paga has been experiencing its fastest period of growth since it was launched in 2012. Between launch date and June 2015 it had US$1 billion in transactions but between July 2015 and July 2016 it had US$800 million in transactions. So why the big spike?:”We’ve had a really good adoption around money transfer and good growth in agents.”

The average transaction size varies but is around N16,000 (US$46):”The money transfer transaction average is higher – N18,000 (US$55.31) but the bill payment average is smaller.”

Although Oviosu is cagey on the full details, he does say that in September there will be big changes to the scope of the services:”The big message is that we want to focus people’s minds on Paga as a payment platform. We’re revamping our consumer and merchant offers. We’re really going after merchants both in store and online….There will be a new version of Paga with this functionality (to use bank accounts), similar to how PayPal works. You will be able to choose where you perform your transactions from.”

In addition Paga will provide services to SMEs for their back office including payroll and credit to merchants. He described being able to give merchants a device that will collect payment from anybody:”We still need to finalise it.”

He acknowledged that it would need a big shift for Nigerian consumers and businesses who are still heavily wedded to cash transactions:”We’ll need a big marketing effort and we need to think how we can move them to it. There’s a journey we cannot skip. We have to walk it. We’re laying the groundwork for the journey”.

He pointed out that a Nigerian company (Pay Attitude) had launched an NFC card:”I don’t know anyone who uses it. They’ve ignored the payment journey…It won’t go anywhere.”

“I always tell people I wouldn’t use a Paga agent. I want to be able to do things for myself. But that’s where the market is. It does take longer but the things driving self-use are finally here.”

So where will the company be in 3 years time?:”I think we’ll have 20 million subscribers and have the single largest network of financial access points. We want 30,000 agents by 2018. We want to be the anchor to a merchant network. But there’s a ways to go,” and he laughs. But every time I’ve met him and he’s given me predictions, they’ve turned out to be right, there or thereabouts.

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