The aftermath of Nigeria’s fintech surge is proving to be a harsh reckoning. Recall the era when fintech startups, flush with venture capital, splurged on zero-fee incentives to capture the vast unbanked population and dominate digital payment networks?
Opay‘s agents flooded neighborhoods like digital pioneers, while Flutterwave‘s APIs buzzed with ambitions of seamless cross-border transactions. Yet, the euphoria faded quickly. Global investment dried up amid economic headwinds, the naira plummeted, and inflation soared above 30%, squeezing margins relentlessly.
Today’s mantra has shifted from “scale at all costs” to “profit or perish.” Leading players such as Opay, Moniepoint, Flutterwave, and Paystack are navigating the brutal realities of unit economics, where the revenue generated per user must offset soaring customer acquisition expenses, operational overheads, regulatory compliance, and the need for diversified income streams.
This transformation is not just a natural progression but a rigorous test of endurance, where fragile ambitions are tempered on the anvil of profitability. In a sector that ballooned from hype to heroism, only the most adaptable will endure.
Rewind to the fintech gold rush: Nigeria’s population exceeding 200 million, with tens of millions still excluded from formal banking due to slow-moving traditional banks, created fertile ground. Mobile phone usage surged past 150 million, turning devices into digital wallets. Foreign venture capital poured in like a seasonal flood.
Consider Paystack’s landmark acquisition by Stripe in 2020 for over $200 million, a milestone for Nigerian startups. Flutterwave also soared to unicorn status with a $250 million funding round, signaling the continent’s fintech potential.
Startups amassed vast war chests, spending heavily on subsidized rides and transfers to amass users and control payment channels. The strategy was bold: dominate the market first, then chase profits later. This approach echoed India’s UPI revolution, where billions of free transactions laid the foundation for digital empires, and Kenya’s M-Pesa, which transformed scale into a telecom-finance powerhouse.
However, history cautions that without solid economic fundamentals, such castles built on subsidies are vulnerable. Nigeria’s fintech frenzy peaked in 2021, but cracks soon appeared as generous incentives concealed deep losses.
Nigeria’s fintech shift towards profitability
While payments unlocked vast opportunities, razor-thin margins-often less than 1% per transaction-force fintechs to innovate or perish. Survivors are layering multiple revenue streams atop their user bases:
| Company | Users/Agents (latest) | Key Metrics (2023-2025) | Monetisation Strategy |
|---|---|---|---|
| Opay | 50M users, 500K agents | 100M daily transactions; $2.75B valuation (2024) | From zero fees to aggressive lending and wealth management |
| PalmPay | 35M active users | Revenue growth from $0.2M (2020) to $63.9M (2023); 15M daily transactions | Expanding from transaction volume to B2B services |
| Moniepoint | B2B-focused | $110M raised (late 2024); valuation over $1B | Dominating lending and embedded finance sectors |
| Flutterwave | 10M+ merchants | Valued above $3B; expanding across Africa and Europe | Driving cross-border payments and API integrations |
| Paystack | 60K+ businesses | Post-Stripe acquisition; banking integrations ongoing | Focusing on SaaS offerings and regulatory compliance |
The figures speak volumes. Mobile Money Operators processed ₦20.71 trillion (~$13.5 billion) in Q1 2025 alone, a staggering 1,500% increase from ₦1.28 trillion in Q1 2021, according to the Central Bank of Nigeria.
Digital transactions surpassed ₦800 trillion in 2024, outpacing traditional banks in both speed and reach. Yet, sheer volume doesn’t guarantee success. Fintech firms are countering challenges by diversifying: Moniepoint targets SME microloans; Opay enhances remittance and investment offerings; PalmPay’s explosive 31,000% revenue growth fuels its B2B expansion.
Average revenue per user (ARPU) is climbing steadily, turning transaction surges into sustainable profit streams. This marks a decisive break from the boom’s reckless spending, as scale now underpins long-term viability.
Navigating market challenges and regulatory landscapes
However, significant macroeconomic pressures persist. The naira has lost over half its value since 2023, inflating foreign exchange costs for import-dependent operations. Inflation remains stubbornly high at 20-30%, eroding profit margins, while capital controls restrict investment inflows.
Funding rebounded to approximately $2 billion in 2024 (Partech Africa), following a dry spell in 2022, with licensed fintech operators doubling to over 430 by early 2025. Yet, regulatory complexity looms large. Overlapping authorities-CBN, SEC, NDIC-create a fragmented environment that, as Kuda’s Musty Mustapha notes, deters investors and stifles innovation.
At the 2025 FinTech Week, Central Bank Governor Olayemi Cardoso emphasized, “Trust is non-negotiable,” unveiling regulatory sandboxes to foster safe innovation, consumer protection measures, and cashless policies that accelerated adoption.
Regulatory enforcement intensified in 2024, with hefty fines and license revocations targeting non-compliant players. Yet, there are silver linings. PalmPay’s CEO Chika Nwosu praises reforms as trust enhancers following the naira redesign. Skeptics remain, however. Interswitch CEO Mitchell Elegbe warns, “Handing out freebies to the underserved and then charging them later is a recipe for failure; unit economics doom many fintechs.”
Former Diamond Bank CEO Uzoma Dozie critiques the crowded market of over 200 fintechs, questioning whether they address genuine problems profitably. Some casualties have emerged, such as Cellulant’s Nigerian division, which collapsed under subsidy pressures. Globally, India’s Razorpay has thrived by leveraging AI-driven compliance frameworks-Nigeria’s fintechs may need similar technological resilience to weather ongoing turmoil.
Key regulatory milestones shaping the landscape:
– 2021: Naira redesign sparks a surge in digital payments.
– 2023: Foreign exchange restrictions tighten, impacting remittances.
– 2024: Regulatory sandboxes launch amid a $2 billion funding resurgence and compliance crackdowns.
– 2025: FinTech Week mandates industry cohesion; Q1 transaction volumes explode.
The final act: Collapse or resurgence?
The era of chasing endless transaction volumes through free incentives is rapidly ending. Survival now depends on strategic discipline-cutting inefficiencies, embracing smart technologies like AI to navigate complex regulations, and shedding unprofitable products.
Innovative offerings such as embedded lending and integrated payment solutions within apps will distinguish the true market leaders.
Two divergent futures await:
- The path to victory: Large, compliant firms like Moniepoint will capitalize on B2B opportunities, especially if currency stability returns. They will layer lending and additional financial services atop their payment platforms to sustain growth.
- The road to failure: Legacy players clinging to unsustainable freebies will burn through capital, leading to consolidation or collapse, leaving only battle-hardened survivors.
Pursuing profitability is not extinguishing Nigeria’s fintech ambitions; rather, it is forging the champions who will endure. These companies have already expanded financial inclusion, raising banking penetration from 40% to over 60%, connecting millions to the digital economy.
In a volatile economic environment, rapid growth was merely a dazzling mirage; sustainable strength is the crucible that will separate the genuine innovators from the pretenders.