Nigeria’s fintech app PalmPay has partnered with Jumia, the leading e-commerce platform in Africa, to allow customers to pay for products on Jumia directly from their PalmPay accounts. This move is part of PalmPay’s broader effort to expand pay-by-bank payment methods, which have become increasingly popular in Nigeria.
The Shift Toward Bank Transfers
The partnership is well-timed, as internet transfers accounted for 51.91% of all e-payment transactions in Nigeria during the first half of 2024, according to the Central Bank of Nigeria. This trend underscores the growing preference for bank transfers over traditional card payments, which incur additional processing fees.
- In 2023, transfers made up 45% of online retail payments, highlighting the gradual shift toward this payment method.
- PalmPay, which serves 35 million customers, has been working with over 100 partners to enhance its online payment solutions, a company spokesperson said.
“We’re building these payment methods for our customers as bank transfers continue to represent an easy payment option,” the spokesperson added.
Jumia’s Competitive Edge
The partnership comes at a time when Jumia is experiencing significant growth. During its 2024 Black Friday campaign, Jumia recorded 2.6 million orders, an 18% increase from the previous year.
Jumia Nigeria CEO Sunil Natraj highlighted the benefits of the integration:
“By integrating PalmPay, we are providing more options for customers to access affordable and quality goods with the convenience of cashless transactions.”
Competitive Landscape
The alliance also reflects the competitive nature of Nigeria’s fintech and e-commerce industries:
- PalmPay vs. JumiaPay:
JumiaPay, Jumia’s in-house payment platform, views PalmPay as one of its largest competitors. Notably, Anthony Mbagwu, an ex-PalmPay executive, now leads JumiaPay’s Nigerian operations. - Fee Reduction Advantage:
By enabling payments directly from bank accounts, PalmPay eliminates fees charged by card processors like Verve, boosting its margins and providing a seamless experience for users.
PalmPay’s Growth Trajectory
PalmPay entered Nigeria in 2019 with backing from a $40 million seed round funded by Transsion Holdings, the parent company of Tecno, Infinix, and Itel.
- The app rose to prominence in 2023, when a nationwide cash crunch drove Nigerians to fintech platforms as traditional banks struggled with the surge in online transactions.
- PalmPay has since leveraged its momentum to forge partnerships and expand its product offerings.
Strategic Vision
PalmPay Chief Marketing Officer Sofia Zab described the partnership as a shared vision between the two companies:
“This strategic alliance aligns perfectly with our shared commitment to delivering a superior user experience and exceptional value to our customers.”
Outlook
The PalmPay-Jumia partnership reflects the continued evolution of Nigeria’s digital payment ecosystem. By simplifying payment processes and aligning with customer preferences for bank transfers, the collaboration positions both companies to capitalize on the growing demand for seamless, cashless transactions.
For PalmPay, the partnership reinforces its role as a leading fintech player in Nigeria. For Jumia, it provides an additional payment option to support its e-commerce growth while enhancing customer convenience. Together, the two companies are setting a new standard for digital commerce in Nigeria.