OPay, the Chinese-owned fintech company, has announced that it will start charging users for transfers to non-OPay accounts.
Previously, the platform had been offering Nigerians free transfers to other banks, but due to sustainability concerns, OPay will now impose a ₦10 ($0.013) charge after the third transfer to other banks in a day.
OPay Announcements for its Customers
According to an OPay customer agent, the transfers to other banks had been completely free on the platform until June 19, 2023.
Before making transfers free, OPay had already been charging ₦10 per transaction to other banks, and this fee increased to ₦45 ($0.059) in 2019.
Some users have expressed their dissatisfaction with the new ₦10 charge on Twitter, seeking alternatives with lower or no charges for transfers.
Why the Recent Announcement
The challenge of sustaining free services is not unique to OPay. Neo-banks and fintechs often leverage free services to attract users, but maintaining this model over the long term proves to be difficult.
Kuda Bank, for example, faced backlash when it announced a stamp duty charge imposed by the government on deposits over ₦10,000 ($13).
Carbon, another Nigerian fintech, acknowledged its inability to sustain free transfers to Carbon Wallets as the fees it paid to debit card issuers and payment processors increased. Similarly, issuers of virtual card wallets, such as Chipper Cash and Payday, started charging users for unsuccessful transactions and virtual card creation.
The high charges associated with traditional banking institutions are considered a major pain point for consumers, including those without bank accounts.
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What OPay Customers Feel About This
Many individuals in Nigeria feel that they do not earn enough to justify opening a bank account. While ₦10 or ₦45 charges may be manageable for tech-savvy individuals, a significant portion of the Nigerian population finds these fees burdensome.
Fintech companies in Nigeria face the challenge of finding innovative ways to onboard these individuals, and offering free services has been one approach.
However, there may be consequences to this strategy. At the Lagos Startup Expo, Odunayo Eweniyi, COO and Co-founder of PiggyVest emphasized the importance of charging customers from the beginning.
Offering free products and services is not sustainable, and the cost of training users to pay for a previously free product is often not worthwhile.
Conclusion
In the Nigerian market, charging customers from the outset or early stages can be a risky move that can make or break a startup.
Fintech companies will need to navigate this delicate balance between affordability for users and the sustainability of their services.
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