UNLOCKING THE SECRETS OF FINTECH REVENUE MODELS IN NIGERIA: TOP 5 EARNERS REVEALED

Fintech has become a buzzword in Nigeria's financial sector, with new startups launching daily to disrupt traditional financial services. 

These fintech firms offer innovative solutions to the age-old problems of financial exclusion, limited access to credit, and high transaction fees that have plagued Nigeria's financial sector for years. However, many people still wonder how these fintech firms make money, and who the top earners are in the industry.

Revenue Models of Fintech Companies in Nigeria:

Transaction fees: Fintech companies in Nigeria make money by charging transaction fees on their platforms. For instance, payment processors such as Interswitch and Paystack charge a small percentage of the transaction value to merchants for processing payments. 

Also, digital banks like Kuda and Rubies charge fees on certain transactions such as ATM withdrawals, international transfers, and bill payments.

Subscription fees: Some fintech companies charge subscription fees for access to premium services. For instance, Cowrywise charges a monthly subscription fee for its investment management services, while Flutterwave charges an annual subscription fee for access to its payment gateway API.

Interest income: Digital lenders such as Carbon and Branch make money by charging interest on loans they provide to customers. They earn a spread between the interest rate they charge borrowers and the interest rate they pay to depositors. 

This revenue model has proved to be profitable, with many digital lenders recording impressive growth rates in recent years.

Data monetization: Fintech companies in Nigeria have access to vast amounts of customer data, which they can monetize by selling to third-party companies. For example, the online lending platform Fairmoney monetizes data by providing credit scores to banks and other financial institutions.

Agency banking: Fintech companies such as Paga and Opay partner with agents across the country to provide financial services to customers in remote areas via point-of-sales terminals (POS).

These agents earn commissions on transactions they perform, while the fintech companies earn a percentage of the transaction value.

Top 5 Fintech earners in Nigeria

There are a vast number of fintech enterprises growing with Nigeria's economy and coming up with more innovative solutions to financial challenges emerging each year but here are the top 5 earners based on their revenue and market share in 2023.

1. Flutterwave: with a valuation of about $3b sits at the top of the growing list

2. Interswitch: Most recent Interswitch valuation puts the company at $1b.

3. Paystack: Stripe acquired Paystack in 2020 valued at $200m

4. Carbon: carbon is one of the fastest-growing fintech platforms in Nigeria, though the company has never made its valuation public, but it raised $5m in fundraising led by venture capital funds in 2019, which gave it a position on this list. 

5. Paga: Like carbon, it is yet to make its valuation public, but in 2018, the company raised about $10m led by the famous Global innovation Fund in a series B fundraising.

The competition in the fintech space in Nigeria is heating up with new start-ups rising every year. 

Without a doubt, this list would see new members next time.