Sylvia Duruson
Paystack, a leading Nigerian fintech, is expanding into offline payments with the launch of virtual terminals for in-person bank transfers. This allows merchants to accept direct bank payments from customers without physical point-of-sale (POS) devices.
Paystack is seizing on the rapid adoption of bank transfers for in-store checkout, such as at supermarkets and restaurants. Virtual terminals provide a faster digital alternative to limited POS devices, which can cause payment delays with high customer volume.
Launched in 2015, Paystack operates in four African countries, but Nigeria is its primary market. It initially focused on cheaper, faster web payment gateways compared to dominant player Interswitch.
However, offline payments have become a major growth area for Nigerian fintechs. New players like OPay, PalmPay and Moniepoint utilise agent networks and POS devices for in-person cash transactions.
In 2022, POS payments represented around 20% of Nigeria’s electronic transaction volume, which hit 5.1 billion worth over $900 billion. Offline payments’ share is likely higher as some fintechs don’t fully report data.
Paystack re-entered offline payments in late 2022 with a POS device. Its new virtual terminals and bank transfers build on this push. Bank transfers accounted for 12% of Paystack’s 2021 transactions, jumping to 28% in 2022. In early 2023, bank transfers make up 34% as adoption surges.
The company has invested heavily in infrastructure to enable instant bank payment confirmation. A partnership with Titan Trust Bank cut transfer latency to under 8 seconds.
Paystack CEO Shola Akinlade said bank transfers are becoming consumers’ preferred payment method, making virtual terminals key for seamless in-person checkout experiences.
Customers like bank transfers for convenience and control in Nigeria’s low-trust environment. Both buyers and sellers can easily track transaction status. Virtual terminals designate unique accounts for payments versus POS devices handling multiple customers.
The product launch comes as Nigeria’s payments industry faces challenges from the central bank’s poorly implemented currency redesign. Cash shortages exposed weaknesses in existing offline solutions as the economy declined.
Paystack sees an opportunity for its faster bank transfer channel to win over in-person businesses struggling with payment delays. The company is leveraging bank transfers’ popularity to target Nigeria’s booming offline payments market.
After initial success in online payments, Paystack has expanded into e-commerce, POS devices, and now virtual terminals to capture a larger share of Nigeria’s evolving fintech space. The latest product demonstrates Paystack’s commitment to providing innovative digital payment solutions for online and offline merchants amid a rapidly changing landscape.
