A neon bank and financial technology company, Carbon has shut down its debit card operations in Nigeria two years after it was launched.
Carbon’s co-founder and CEO, Ngozi Dozie, disclosed this via a Substack post. While he did not specifically state the reasons for discontinuing the card service, Dozie’s post suggested that the company might have made a hurried decision in introducing cards.
In addition, the current forex challenge might also have contributed to the closure of Carbon’s card business, given that the costs of operating the card were in dollars.
“When I take a step back with the benefit of hindsightand 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?”,Dozie wrote.
While noting that many founders often make the mistake of running on little information without proper analysis, he said he would not have launched the card operations if he had properly analyzed the industry. On hindsight, Dozie acknowledged that Nigerians already have many debit cards.
“If I had done the analysis and truly evaluated the opportunity, I don’t think I would have been that about pushing a strategy to provide consumers with their fifth debit card or so. The decision might have been the same, but perhaps with more respect for the potential risks.
“Maybe I had a scoop that if we launched a debit card, customers would trust Carbon more. Butthey are those big banks that they trust, despite I having the same bright, shiny card, marketed on billboards with a happy-go-lucky youth with funky haircuts and bright clothing”, he also wrote.
He advised fintechs considering launching a debit card to critically analyse the industry before they dabble into it.
Currently, fintechs such as Kuda, Moniepoint and OPay, among others have rolled out debit cards for their customers. However, while Carbon’s card was launched in partnership with Visa, an international card provider, OPay, Moniepoint, and Kuda are rolling out Verve cards, which gives them a local advantage, especially with the current forex challenge.
When Carbon launched its debit cards in August 2021, it described it as the “big step in the company’s transition from being Nigeria’s biggest digital lender to a microfinance bank licensed by the CBN.”
“With the debit card, Carbon bank account holders will now be able to spend funds in their accounts via online and offline channels like ATMs and POS machines. More importantly, Carbon is prioritizing user experience, a trending issue among customers of financial institutions,” the company said at the time.
It added that with the introduction of cards, it planned to build on its customer base of 3 million users (as of then) by offering a more complete banking experience for people with different needs.
Economic conditions in 2024 were far from favourable as the manufacturing sector grappled with depreciating exchange rates, soaring inflation and dwindling purchasing power. In response to these inflationary pressures, the Central Bank of Nigeria introduced higher interest rates and tightened banking sector liquidity, aiming to curb inflation.
Despite these measures, manufacturers continued to depend heavily on bank loans for working capital and capacity expansion.
Data from Stanbic IBTC revealed that Nigeria’s PMI rose to 52.1 in May 2024 from 51.1 in April 2024, indicating a slight improvement as manufacturers struggled with these economic headwinds.
The resilience of the sector was also reflected in the lending patterns of major banks, which continued to support manufacturers with substantial loans.
