Nigerian neobank, Carbon, has shut down its debit card operations. Carbon Co-founder Ngozi Dozie made this known in a substack post yesterday. According to him, the fintech has already sent an email to all its debit card holders announcing that they would be discontinuing all card operations on the 19th of June.
Though he was not specific about the reason for shutting
down the debit card operations, he may have alluded to the high cost of
operations denominated in the dollars as being the possible reason. He said,
“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?”
In June 2021, Carbon launched its debit card after entering
into a five-year partnership with tech giant Visa to issue virtual and physical
debit cards to its customers across Africa. Its promise of “delivering an
unparalleled banking experience that is both safe and reliable across all
touchpoints” with the debit card seems to have come to a halt.
While some fintechs such as Carbon and Kuda in Nigeria opted
to partner with global card schemes like Visa and Mastercard to issue debit
cards, some others like Moniepoint went for a local solution in Verve. The
neobanks that issued Visa cards must have considered global appeal, deep pocket
support from the card schemes, ability to use the cards outside Nigeria; they
possibly should have considered other factors like cost of dollar-denominated
operational fees, number of local vs foreign transactions.
Ngozi stated that “If I had done the analysis suggested above 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.”
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