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Banking Sector

McKinsey Reveals That Merchant Acquiring Offers Nigerian Banks and Fintechs an Opportunity to Dethrone Cash




Nigeria’s recent cash shortages exposed the vulnerability of the country’s alternative payment systems and have brought renewed momentum towards a cashless economy, fueling a surge in digital payments.

The cash crunch caused significant hardship for Nigerian citizens, who were unable to access their savings. It also disproportionately affected small- and medium-sized enterprises (SMEs), which account for more than 90 percent of businesses and are responsible for 80 to 90 percent of all customer-to-business (C2B) payments in Nigeria. This, however, also opened the door for merchant acquirers looking to take advantage of these tailwinds and make headway in this challenging market.

According to McKinsey’s new analysis, Acquiring the advantage in a fast-evolving industry, the outlook for merchant acquiring in Nigeria is optimistic, with several trends working in its favor: digital penetration and usage in the country are on the rise; the fintech industry is evolving quickly to cater to the demands of a young and digitally-savvy population; and financial and government institutions are collaborating to create a conducive environment that fosters financial inclusion.

“It is important for digital payment companies to ensure that the move to digital payments that happens, as a result of the recent events, doesn’t go to waste,” says Mayowa Kuyoro a partner in McKinsey’s Nigeria Office, and leader of the firm’s Payments Practice in Africa. “Companies that act now to leverage technology and relationships to offer SMEs hungry for digitalization more reliable and cost-effective payment solutions could attain a position of strength as Nigeria accelerated toward cashless transactions.”

As of 2021, the electronic payments sector generated an estimated $2.1 billion in revenue and $1.1 trillion in value, approximately 60 percent of which is accounted for by domestic payments, which amount to $1.2 billion in revenue. More significant growth in this space is expected over the next few years, with domestic payments revenue projected to grow by around 34 percent per annum by 2026, equating to $5 billion.

The domestic C2B market accounted for around $450 million in revenue from 2021, with merchant acquiring being the most attractive part of this value chain. Of this, C2B merchant payments account for $320 million in revenues. Combined, the acquiring bank, the terminal provider, and the Payment Terminal Service Provider (PTSP) capture around 65 percent of revenues, and total merchant acquiring revenue is estimated at around $200 million. By 2026, this revenue is expected to grow to around $900 million, driven primarily by card transactions.

McKinsey has done significant work with both merchants and merchant acquirers to uncover what may be needed to accelerate the transition to digital. While the culture of cash may be eroding, obstacles still remain on the path to digitalization. For instance, POS (point of sale) penetration in Nigeria is significantly below that of comparable African economies. And since alternative payment acceptance is still in its early days and merchant literacy levels are low, onboarding new merchants can be challenging and costly, requiring multiple touchpoints.

Traditionally, merchant acquiring in Nigeria has been led by banks that issued card-based POS to large corporates and was profitable only to those with scale. But the market is ripe for expansion. Traditional channels catered to only one form of payments—cards—but at just 0.6 per 100 adults, Nigeria has one of the lowest card penetrations in the world. These channels have also largely excluded SMEs.

While SMEs may be harder to acquire, they represent a significant opportunity for merchant acquirers in terms of both volume and value of transactions. Digital innovators that can offer SMEs hungry for digitization more reliable and cost-effective payment solutions are gaining an advantage and changing the face of merchant acquiring.

As digital penetration grows, electronic payment methods are also growing. Nigeria has more than 170 million mobile phones and internet penetration has been increasing. The number of POS terminals in the country grew significantly. Local fintechs are innovating rapidly, forging partnerships, and attracting international investment to enable Nigerian SMEs to participate in the digital global economy. And the hastened adoption of cashless payments and merchant acquiring, generated strong organic demand for digital payment solutions by merchants of varying sizes and scale.

“By leveraging technology and collaborating with stakeholders across the payment ecosystem, merchant acquiring companies could make significant inroads into this potentially valuable segment. At the same time, by providing SMEs with better payment services, merchant acquirers also have a key role play in driving financial inclusion and supporting the Nigerian economy. Most importantly, they can help to ensure that a lack of cash need never again be the reason that Nigerians experience hardship,” says Tola Sunmonu-Balogun, an associate partner in McKinsey’s Lagos office.


Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq,, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Banking Sector

Access Bank, Others Collect N154 Billion in Electronic Banking Fees in H1’23, a 16.7% YoY Surge



Global Banking - Investors King

In the first half of 2023, customers of Nigeria’s top nine commercial banks paid a whopping N154 billion in fees for utilizing electronic banking services, reflecting a robust 16.7% year-on-year increase compared to H1’22’s N131.97 billion.

The data, extracted from the financial statements of these banks, underscores the escalating trend of Nigerians embracing electronic payment channels.

Leading the pack in revenue generation from these fees is Access Bank, amassing N43.9 billion, followed by United Bank for Africa Plc (N51.07 billion), Zenith Bank (N22.27 billion), Guaranty Trust Bank (N21.2 billion), and others like Stanbic IBTC (N2.14 billion), First City Monument Bank (N7.4 billion), Unity Bank (N1.96 billion), Fidelity Bank (N1.85 billion), and Wema Bank (N3.13 billion).

Electronic banking services encompass a gamut of options, including internet banking, mobile banking, ATMs, and Point of Sale (PoS) systems.

Recent data from the Nigerian Interbank Settlement System (NIBSS) for Q1’23 indicates a substantial surge in electronic transactions.

Transaction volume increased by 209% YoY to 4.7 billion, and transaction value grew by 48% YoY to N137.52 trillion.

The nine banks collectively raked in N66.7 billion in account maintenance fees and commissions during H1’23, reflecting a 14.7% YoY rise.

Zenith Bank led this category with N21.02 billion, trailed by Access Bank (N13.36 billion), Guaranty Trust Bank (N10.5 billion), and United Bank of Africa (N9.6 billion).

Overall, the banks’ cumulative net fees and commission income registered a substantial 20.7% YoY growth, reaching N448.47 billion in H1’23 from N371.43 billion in H1’22.

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Banking Sector

Access Holdings Posts 52.6% Profit for the First Half of the Year

Parent Company of Access Bank Celebrates Remarkable Financial Performance in H1’23



Access bank

Access Holdings Plc, the parent company of Access Bank, has reported a 58.9 percent surge in gross revenue to N940.3 billion for the first half of 2023.

The financial services giant also recorded remarkable growth in Profit Before Tax (PBT) and Profit After Tax (PAT) at 71.4 percent and 52.6 percent, respectively, culminating in N167.6 billion for PBT and N135.4 billion for PAT during the same period.

These financial milestones were unveiled as part of Access Holdings’ Audited Consolidated and Separate Financial Statements for the period concluding on June 30, 2023.

The driving force behind this unprecedented growth can be attributed to a potent combination of factors. A 63.0 percent growth in interest income and a 51.9 percent increase in non-interest income fueled the surge in gross revenue.

Access Holdings also witnessed a 35 percent year-to-date growth in customer deposits, capping the first half of 2023 at an impressive N12.5 trillion. This remarkable achievement encompassed all business segments, reinforcing the Group’s status as Nigeria’s largest financial institution by total assets.

The company’s total assets grew by 39.0 percent year-on-year to N20.9 trillion while shareholders’ funds surged by 40.6 percent to N1.7 trillion.

These astounding figures underline the Group’s ability to generate value from a diversified business portfolio, spanning banking, asset management, and payment services.

Herbert Wigwe, the Group Chief Executive Officer of Access Holdings Plc, commented on the company’s positive performance, saying, “Our growth plans for the African continent remain firm and clear, driven by the strong long-term growth prospects and trade opportunities seen across many of the countries.”

He went on to emphasize the company’s commitment to its 5-year cyclical strategy, stating, “Our primary objective remains to transform Access Holdings Plc into a leading financial and ecosystem player, fostering opportunities for shared prosperity among all stakeholders.”

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Banking Sector

Central Bank of Nigeria Postpones 293rd Monetary Policy Committee Meeting



Central Bank of Nigeria - Investors King

The Central Bank of Nigeria (CBN) has announced the postponement of its 293rd Monetary Policy Committee (MPC) meeting, originally scheduled for September 25th and 26th, 2023.

Dr. Isa AbdulMumin, the bank’s Director of Corporate Communications, released a statement on Thursday confirming the decision.

In the statement, Dr. AbdulMumin stated, “The Monetary Policy Committee of the Central Bank of Nigeria has deferred its 293rd meeting, which was initially planned for Monday and Tuesday, September 25th and 26th, 2023, respectively. A new date will be communicated in due course. We regret any inconvenience this change may cause our stakeholders and the general public.”

While the CBN did not provide an official reason for the postponement, some industry experts suggest it may be related to the pending approvals for the newly appointed governor and deputy governors of the bank.

President Bola Tinubu recently nominated Yemi Cardoso as the potential head of the CBN. Additionally, Tinubu has endorsed the nominations of four new deputy governors for the apex bank, who are expected to serve for an initial term of five years, pending confirmation by the Senate.

The nominated deputy governors are Emem Usoro, Muhammad Abdullahi-Dattijo, Philip Ikeazor, and Bala Bello. However, the appointment of the CBN governor is contingent upon Senate confirmation, which is currently on a yearly recess.

The CBN assures stakeholders and the public that the rescheduled MPC meeting date will be communicated promptly as soon as it is confirmed.

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