Like customer behaviour, market trends are fleeting. Today, you’re excited to be the first to provide a new technology (read: contactless payments); tomorrow, the market tide shifts back to the old-school tech you thought was dying. Case in point: Temu, the Chinese e-commerce startup you can’t get out of your ad streams, has partnered with Nigerian card provider Verve.
For years, local Nigerian cards were a giant pain because they didn’t work for international transactions. Banks and regulators restricted them to domestic use, making it difficult to pay for global services, subscriptions, and travel. Banks weren’t concerned; they weren’t trying to crack international payments or bring the exclusivity of dollar-denominated cards to the average Nigerian. GTBank, a tier 1 lender, stopped international transactions on its naira-denominated Mastercards on December 31, 2022.
But for fintechs which exist to somehow make life easier for customers neglected by banks, this became a problem to solve. In the following years, the popularity of USD virtual cards—which allow customers to convert their local currency, hold dollars, and make international payments—took off.Â
Fintechs plugged into card infrastructure providers like Alcineo, partnered with Visa and MasterCard, or used overlay solutions with USD virtual card issuers like Bridgecard. Soon, their selling proposition became: Get USD virtual cards, shop online—followed by a list of international platforms that punctuated marketing copies.
Yet, local card scheme Verve, owned by payments giant Interswitch, remained in the lead—mostly thanks to banks that handed them out indiscriminately, it came right out of the box for Nigerians who bought new cards. Worse for fintechs, integrating foreign cards meant paying hefty fees in dollars which they passed on to customers. This is why you paid a small token in fees when you sneezed with your fancy virtual USD card.
But the black eye may get even blacker for fintechs. With international merchants like Temu partnering with Verve, the demand for USD virtual cards could shrink as Nigerians embrace local options. Temu’s move could affect Amazon which still doesn’t have a friction-free way for Nigerians to buy items on its platform. But for local players like Jumia and Konga—whose embedded finance apps already support local payments—it’s just another day in business, no problem.
