OPay caps free bank transfers to 3 per day as economic realities set in

·
July 4, 2023
·
3 min read

Key takeaways:

  • An OPay customer agent has confirmed that the fintech company will start charging users for transfers to other banks
  • Users will incur a ₦10 ($0.013) charge after their third transfer to other banks in a day.
  • While free transfers are a great way to win customers over, they are proving unsustainable for fintech startups.

OPay, a Chinese-owned fintech that has been offering Nigerians free transfers to other banks, has started charging ₦10 for transfers to non-OPay accounts.

A call to one of its agents confirmed that transfers to other banks had been free on the platform up until June 19, 2023, when it started charging users ₦10 after their third transfer to other banks in a day.

Interestingly, before OPay made transfers free, it was already charging ₦10 per transaction to other banks, till it increased to ₦45 ($0.059) in 2019.  

While it's not clear when OPay made transfers completely free, the OPay agent that spoke to Techpoint Africa said before June 19, 2023, transfers on the platform to other banks were completely free.

Some users have taken to Twitter to express their displeasure at the ₦10 charge.

Fintechs can't sustain free services 

Free services are one of the ways neo-banks and other fintechs attract users to their platforms. Sustaining the model, however, is another story.

Kuda Bank, a Nigerian digital bank with the moniker, "Bank of the Free" got users riled up when it announced in 2019 that it was required by the federal government to charge a ₦50 ($0.065) stamp duty on deposits over ₦10,000 ($13).  

To be fair, the stamp duty was enforced by the government and none of the proceeds stays with the company, but this didn't stop users from calling out the Bank of the Free.

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Carbon, another Nigerian fintech admitted that it could not sustain free transfers to Carbon Wallets as more customers increased the fees it paid to debit card issuers and payment processors.

Issuers of virtual card wallets such as Chipper Cash and Payday began charging users for unsuccessful transactions and creating virtual cards.

Can we blame fintechs? 

According to the Nigerian Financial Services Market report, the main pain point for people using banking institutions is "high charges and fees."

An image showing the pain points of people who use banking institutions.

Even people without bank accounts feel they do not earn enough to open bank accounts.

While ₦10 or ₦45 charges may be a drop in the bucket for the tech-savvy demographic of the country, a good number of people in Nigeria find these charges expensive.

A majority of people without bank accounts in Nigeria make less than ₦35,000 a month ($46), 182% lower than the global salary average of $1,019.

This leaves Nigerian fintechs to come up with a creative way to onboard these people, and free services might just be what will do it.

However, there could be consequences to this tactic.

At the Lagos Startup Expo in May, COO and Co-founder of PiggyVest, Odunayo Eweniyi explained in her master class why it is important for businesses to charge customers from day one.

Besides the fact that offering products and services for free isn't sustainable, she maintained that the cost of training users to pay for the product is simply not worth it.

In a market like Nigeria, however, charging from day one or day 20 is a bet that could make or mar a startup.


Read next: Companies with the most PoS agents in Nigeria - Report


He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.
He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.
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He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.

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