The number of POS terminals in Nigeria has increased from 150,000 in 2017 to 543,000 in April 2021, according to Statistical. During this period, the volume of POS payments in the country also increased Verry muchreaching more than 500 billion in May 2021.
In Nigeria, POS terminals are used to process card payments at points of sale as well as for agency banking purposes, a branchless banking system where agents act as human ATMs. And although the terminals have different providers (banks and fintechs) and functionalities, they principally operate online with ja handful also have offline capabilities.
Based in Lagos and Helsinki ZirooPayone such provider, raised an $11.4m Series A led by a Lagos-based venture capital fund Zrosk Investment Management. Existing investors, Nordic venture capital fund Inventure, returned, with participation from other private and institutional funds such as Fedha Capital and Exotix Advisory.
Individual investors like Petri Kivinen, the former managing director of Deutsche Bank, Morgan Stanley and Renaissance Capital; Abiodun Ajai, Director, Sub-Saharan Africa, Bank of America; and Jonas Dromberg, former bureau chief at Bloomberg, also participated.
This new capital will be be deployed toward expanding its payments infrastructure, accelerating growth and growing its team, the company said.
In 2014, when we introduced the company, IroFit (ZirooPay’s parent company) pitch was that its “no internet” technology – a mobile platform for small businesses to accept card payments via a mobile app and an EMV-certified card reader – worked in areas where there is no data coverage, especially in emerging markets.
Only based in Helsinki at the time, CEO Omoniyi Olawale said the funds he raised ($600,000 in seeds) would be to throw a launch in Nigeria. Nevertheless, it was only five years later that the company completed this launch in Lagos. And in a recent call with TechCrunch, Olawale said the delay happened because his company, which had raised an additional $2 million, was refining its technology and adding more capabilities.
This ground remains unchanged and after three years of operation, ZirooPay has grown immensely. According to the company on 15,000 merchants use its TPE and its mobile application. Those merchants processed $500 million — a 5,000% increase in three years — out of 10 million transactions, the company continued..
One of the biggest challenges to the mass adoption of card payments at point of sale is the rate of failed transactions due to poor internet connection. “This led us to create our in-house technology for which we have a patent that allows us to process these events in real time without an internet connection,” Olawale said of his decision to take ZirooPay offline first.
“The product was therefore built around this major problem; with that, we can identify to deliver a 95% trade success rate compared to less than 50% you find in the market,” he added.
The next big issue for POS terminals is functionality, meaning what other features can they offer beyond payment processing. Every interaction retailers and agents have with customers is a mine of data for the payment processor and merchants. But since POS terminals have hardly any accounting capabilities, that happens more often than not is that traders manually reconcile their books daily or rely on Khatabook-like platforms such as Kippah to digitize their processes.
But ZirooPay tells merchants who use its platform not to look elsewhere. Its mobile app allows small businesses in the retail, banking, hospitality and service industries to perform similar tasks, such as tracking sales and managing business operations, Olawale said.
“Think of all the cash registers you see in big supermarkets can do; with an Android app and a mobile POS card reader, we offer the same functionality to small businesses,” he remarked.
“We were able to see over 70% of our users migrate from paper-based accounting to in-app sales accounting within three months of onboarding.”
The growth funding will help ZirooPay expand its product line and include Additional payment channels and options with the aim of building an omnichannel system for merchants. And like Point-of-sale providers in Nigeria, especially fintechs, are increasingly focusing on agency banking – a massive fintech segment that is strongly driving financial inclusion – ZirooPay eyes the prospect of dominating a retail space in the open detail.
“No big company is coming in with modern technology trying to tackle this space and it’s an area where we see an opportunity for us because we’re principally a retail payment platform. Even though we provide agency banking services on the side, we are focused on retail, and that is something that differentiates us from other players,” the CEO said.
Samson Esemuede, Managing Director and Chief Investment Officer of Zrosk, said of the investment, “The growth of the African continent’s online economy has been remarkable; Neverthelessthe offline economy is orders of magnitude bigger than the online economy.
“ZirooPay has a patented technology advantage (which works without an internet connection) and a distribution model that significantly increases the chances of digitizing the offline economy at a unit cost that makes the story particularly compelling. The payments space has become well-resourced and competitive, but the white space we see in the digitization of cash is why we are optimistic about the prospects for this investment.