O3 CAPITAL: CONTRIBUTING TO A CASHLESS ECONOMY

As of 2011, Nigeria had about 60 million debit cards across all banks and across the Visa, MasterCard providers, but credit cards were less than 250,000 - Which was a huge disparity when you compare the numbers against the CBN cashless policy initiative.

The idea behind O3 Capital was that if banks were afraid to issue credit cards because of risk, then imagine a company that could insure that risk, created by banks? But In trying to build on the O3 idea, critical questions were raised like: "Why do we want to insure the risks created by banks when we cannot testify to the process they use to derive and assess those risks?" and doing that would've meant that we would have no idea about what they (the banks) were doing or did. Therefore, we considered issuing our own credit cards, which would allow us to know our own credit scores and protect ourselves against risks. It was this decision that led to O3cards becoming a credit card issuer independent of traditional banks.

Nigeria was heavily a cash-driven economy at the time we were setting up, but we knew a change was inevitable because our vision aligned with the CBN's "cashless society" drive, the CBN numbers indicate that year on year in the last 12-13 years, the number of cashless transactions or volume has been increasing tremendously, and it's growing. So, we are happy to be part of the players that started that movement. However, credit cards are not all about being cashless; it's also about giving the additional ability to people to meet their needs as and when they want it.

In recent years, the discussion is no longer about cashless transactions, but now about bankless transactions done with phones; and as a company, we transfer from our cards into a mobile app that does not only cashless transactions but also bankless transactions. It's just a matter of time. And Nigerians are really embracing it, but not enough, the world is moving fast, but we'll get there. Despite the fact that people still think that the cashless policy drive by the CBN is rather slow, the CBN has done a fantastic job in promoting and sustaining it till date; providing enabling environment for Fintech companies like O3 Capital to thrive, but we all have to realize that it's not just a job for the CBN alone, we all have to be involved. Although the banks are regarded as "brick and mortar" compared to fintechs, they have done their part; they pushed the ATM and POS terminals trend.

Finally, when it comes to the benefits we provide through our fintech services, Nigeria isn't far behind when you compare us to the "developed" societies; in fact, we are far ahead when it comes to instant transfers. But with the credit card culture, We're behind and it puts the people and economy at a big disadvantage. Anywhere in the world, credit cards drive the cashless economy. What credit cards do is that it gives people higher purchasing power; purchasing power means that people can buy more goods and services as they need. Which in turn means that the service industry and the goods industry get to sell more; more sales for them, means more income for them. And more income for them means more tax for the government. More tax for the government means spending power to create infrastructure for the people.


An excerpt of this article was taken from the interview in The Guardian newspaper with O3 Capital's CEO Abimbola Pinheiro.