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How digital platforms are disrupting the recharge card business in Nigeria

The recharge card business in Nigeria is facing a decline as more people opt for digital methods to purchase airtime, such as through mobile apps provided by banks and fintech companies. This trend has affected not only the roadside sellers, but also the licensed Value-Added Services (VAS) providers in the telecom industry. However, despite the challenges, opportunities for new businesses and agents are emerging in the digital landscape, creating potential win-win scenarios for all stakeholders.

The impact of cash crunch and COVID-19 pandemic

One of the factors that accelerated the shift from physical cards to digital platforms was the cash crunch that Nigeria experienced early this year due to the Central Bank’s policy on Naira redesign. Many Nigerians realized they could conveniently purchase airtime through mobile apps without looking for cash to buy. Moreover, the COVID-19 pandemic also encouraged people to adopt contactless transactions and avoid physical interactions with card sellers.

According to a report by Nairametrics, a recharge card seller in Lagos said she now struggles to sell N1,000 worth of cards a day, compared to N20,000 she used to sell in less than two days before. Another seller said she hardly sees her regular customers who used to buy up to N5,000 worth of cards. She said most of them now buy from their apps and only those without bank accounts are buying cards.

How digital platforms are disrupting the recharge card business in Nigeria

The role of banks and fintech companies

Banks and fintech companies have been offering airtime top-up services for several years, but they have become more popular and accessible in recent times. They provide convenience, security, and incentives for customers to use their platforms. Some of them also offer discounts, cashback, and loyalty points for airtime purchases.

According to a report by TheTimes, some of the leading players in this space include GTBank, Zenith Bank, Access Bank, First Bank, UBA, Interswitch, Flutterwave, Paga, OPay, Carbon, Kuda, and FairMoney. These platforms allow customers to buy airtime for themselves or others using their debit cards, USSD codes, mobile apps, or websites. Some of them also enable customers to buy data bundles and pay bills using the same platforms.

The opportunities and challenges for VAS providers

Value-Added Services (VAS) providers are licensed by the Nigerian Communications Commission (NCC) to offer services such as bulk SMS, caller tunes, mobile content, and recharge card printing and distribution. They are also responsible for generating and activating the PINs that are used to load airtime from physical cards.

However, with the decline in demand for physical cards, these providers are facing challenges in sustaining their businesses. Some of them have resorted to reducing their margins or offering incentives to attract customers. Others have diversified into other services such as PoS terminals, mobile money agents, or e-commerce platforms.

On the other hand, some VAS providers have also seized the opportunity to partner with banks and fintech companies to provide digital airtime top-up services. For instance, E-Top Up Africa (ETUA) is a VAS provider that has partnered with GTBank to offer airtime top-up services through its *737# USSD code. According to its website, ETUA claims to have over 15 million customers and over 50 million transactions monthly.

The future of the recharge card business in Nigeria

The recharge card business in Nigeria is undergoing a transformation as digital platforms are disrupting the traditional model. While this poses challenges for some players, it also creates opportunities for others. The key factors that will determine the success or failure of these players include innovation, customer service, pricing strategy, and regulatory compliance.

As more Nigerians embrace digital platforms for airtime purchases, it is likely that physical cards will become obsolete in the near future. However, this does not mean that the recharge card business will die out completely. Rather, it will evolve into a more efficient and convenient system that will benefit both customers and service providers.

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