Palmpay’s 25 million registered users and superapp dreams
Palmpay’s 25 million registered users and superapp dreams
A.k.a Make dreams about African super apps great again
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Palmpay’s 25 million registered users
In March, Semafor named Palmpay as one of the big winners of Nigeria’s cash crisis. Palmpay is not a company with humble beginnings; it launched in 2019 with $40 million in seed funding and an app preloaded on 20 million Infinix, Tecno and Itel smartphones. Per a 2019 TechCabal article, “[Palmpay] hopes to extend the blessings of banking and personal finance to everyone who can download its mobile app using a smartphone.” Yet, as Palmpay celebrates 25 million registered users–a metric that will understandably raise questions–it will credit some of its success to its understanding of distribution.
Most neobanks fintech apps in the Nigerian market fight for the same customers, the slim pickings that make up Nigeria’s formal working class. Most of these customers already have bank accounts, and despite their constant annoyance with the big banks, they’re bound to stick with them. Neobanks and fintechs are backup accounts they’re willing to try sometimes.
Distribution and discounts were the first way to solve that problem. A fintech app with free transfers, discounts on food deliveries and other freebies that would keep customers locked in. The other answer has been to focus on the underserved sector—the army of Nigerian informal workers who don’t have bank accounts. A mix of factors had left this market segment ignored for a while; the big banks didn’t care too much about them, and these workers typically preferred cash. Any real disruption would start by convincing this market sector that banking is safe and digital payments trump cash any day.
That’s where agent networks come in. The mobile money agent on a busy market street tells me she opens Palmpay accounts for many market people here. “It’s very fast,” she tells me, underscoring another factor that has helped win people over. Point of sales terminals take 24 hours to settle transactions and charge the merchant small fees–good luck convincing a small-time trader whose business has small margins to use that. Transfers, on the other hand, can be iffy. Fake transfer alerts, network downtimes and other trust issues are the primary reasons people distrust transfer alerts.
Again, solving this trust problem has been a mix of planning, distribution and sheer luck. Palmpay and OPay have a reputation for offering the fastest transaction times, and for many people, those apps are the next best thing to cash. The network of agents also means you can deposit and withdraw cash even when you use any of those apps. Yet, these companies still needed the cash crunch to become nearly indispensable to people. So what do you do when you’ve cornered a good piece of the mass market pie?
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It’s easy to understand that Palmpay wants to take its offering further. It’s saying all of those things you hear when a company is targeting the middle of the market: business banking (does anyone know what this means), super app and touting its transaction volumes. Will winning the trust of a mass market help the company win the customers hotly contested by banks, neobanks, and 100 other fintechs?
Right now, Palmpay has nothing to lose and everything to gain. It feels good to hear a company talk about super apps again, although it gives throwback Thursday vibes. My final thought is that debit cards are definitely on the way if it’s coming for newer markets. Overall, I look forward to seeing what this super app adventure brings.
Contactless payments are here
Today's news that the CBN has shared guidelines for contactless payments feels long overdue. While most bank cards are NFC enabled and can support contactless payments, Nigerian banks haven’t turned on the capability–big shout to the Open Africa podcast for an explainer. Most delays have been around a framework for addressing the attendant risks. CBN has, for instance, placed an N15,000 limit on contactless payments.
Unlike card payments, contactless payments are touch and go–no pin, no authorisation, no waiting forever for confirmation. It’s the closest thing to cash because the transaction happens in seconds.
What I’ve been reading
We’re back to talking about superapps again
This podcast I enjoyed on how a fear of failure stifles innovation
This enjoyable podcast on how cards work