Nigerian fintech company Carbon has announced the discontinuation of its debit card services in Nigeria, marking an end to the initiative two years after its launch. The company’s co-founder and CEO, Ngozi Dozie, revealed this decision in a Substack post on Wednesday.
While Dozie did not explicitly detail the reasons for this move, his post implied that the introduction of debit cards might have been a strategic misstep. Additionally, the prevailing foreign exchange challenges, which incurred operational costs in dollars, likely influenced this decision.
Reflecting on the situation, Dozie wrote, “When I take a step back with the benefit of hindsight (and a card operation bill denominated in USD$), I question why practically all neobanks are pushing cards or even getting into it. Was this the right strategy for ALL of us, or was Carbon just unlucky?”
Founders’ Reflections
Dozie admitted that many startup founders often proceed with limited information and insufficient analysis. He suggested that, had there been a more thorough evaluation of the industry, Carbon might have avoided launching its debit card services.
“Nigerians already have many debit cards,” Dozie acknowledged. “If I had done the analysis…and truly evaluated the opportunity, I don’t think I would have been that gung-ho about pushing a strategy to provide consumers with their fifth debit card. The decision might have been the same, but perhaps with more respect for the potential risks.”
He also pondered whether the launch was driven by a belief that a debit card would bolster customer trust, likening the strategy to larger banks’ marketing tactics.
Also read: What is Inlation? Understanding the Rising Inflation rate in Nigeria
Advice to Fintech Startups
Dozie advised other fintech startups to critically analyze the industry before venturing into debit card services. His reflections serve as a cautionary tale for neobanks considering similar strategies.
Industry Context
Currently, several fintech companies in Nigeria, including Kuda, Moniepoint, and OPay, have introduced debit cards. However, unlike Carbon’s partnership with international provider Visa, these companies are leveraging Verve cards, which provide a local advantage amid the current forex challenges.
When Carbon launched its debit cards in August 2021, it described the move as a significant step in transitioning from Nigeria’s largest digital lender to a microfinance bank licensed by the CBN. At the time, Carbon emphasized that the debit card would enhance user experience by enabling customers to spend funds via online and offline channels, including ATMs and POS machines. The company aimed to expand its customer base of 3 million users by offering a more comprehensive banking experience.
Carbon’s decision to halt its debit card services underscores the complex and often challenging landscape fintech companies navigate, particularly in markets with significant currency volatility and competitive pressures.
