Nigerian neobanks and banking agents have formed a mutually beneficial partnership that has been instrumental in distributing over 17 million debit cards across the country. Agents, who often have established businesses, serve as de facto branches for these fintech companies, providing essential services like account opening, deposit acceptance, withdrawal processing, and card issuance. In return, they receive additional income.
This collaboration is particularly significant due to the widespread use of feature phones in Nigeria. Many customers rely on physical cards for transactions, as their devices are incompatible with mobile banking apps. Agents play a crucial role in reaching these customers, especially in rural areas where access to fintech offices may be limited.
To facilitate card distribution, neobanks sell cards to agents at a discounted rate, who then resell them to customers at a significant markup. While this strategy can be costly for fintechs, it has proven effective in acquiring new customers. However, agents face challenges such as capital requirements and varying demand, which can impact their profitability.
Despite these hurdles, the partnership between neobanks and agents remains strong. Both parties recognize the value of this arrangement, as it enables them to reach a wider customer base and drive financial inclusion in Nigeria.
