Types of Fintech Companies You Should Know 2025
Do you know there are different types of fintech companies? We will be discussing the different types of fintech companies and there requirements.
In the last 14 years, fintech has become very important for managing our money and changing how we handle our finances. It’s not just about banks getting better anymore; it’s a big industry, all about money, trading, and keeping things safe.
Many businesses are competing with Fintech companies, and more are considering it. The way we carry out financial transactions is constantly changing with the help of Fintech tools, which make it easier.
After a big money crisis worldwide, fintech started growing around 2007/2008. People didn’t trust regular banks as much after that, so technology changed how people manage their finances.
In Nigeria, Fintech is growing fast. More than $2 billion has been invested in it, and 254 companies are helping more people access money services.
The financial sector has become very digital because of new technology and rules to keep the money system safe. It’s important to share what’s happening in this growing industry with everyone involved.
Fintech uses technology to make it easier for people to use money services, like loans and payments.
In Nigeria, The financial sector has gotten a lot better because of fintech. New technologies, better Internet, the use of mobile phones by many people, and the strategy used by the Central Bank of Nigeria (CBN) have all contributed to the success.
A good number of Nigerian adults use fintech for lots of financial transactions. These transactions range from paying bills to investing in things and getting insurance.
READ ALSO: Top 10 Fintech Companies in Nigeria 2024: Full Guide
7 Types of Fintech
Digital Bank
Digital banks are companies in fintech that give banking services only on the Internet. They work like regular banks but entirely online. They provide services such as accepting deposits, opening accounts, and granting loans depending on their license type.
These digital banks include Alat by Wema Bank, Kuda, Sparkle, Adspire by Advans, Mint, Adspire, One Bank, Rubies, V by VFD, and Kuda Bank. These banks offer all the usual services you’d get from a regular bank, and you can access them from anywhere with the Internet.
Payment Service Providers
Payment Service Providers are fintech companies that allow businesses to handle financial transactions. They mainly provide tools for collecting and sending money, making it easy for customers to pay for things online. These types of fintech companies are very active in Nigeria, where they’re used to pay bills and other expenses.
They offer complete electronic payment solutions and work closely with banks. They’re not traditional banks but offer similar services that benefit communities without traditional banking access.
There are different types of licenses for these companies:
Switching and Processing companies:
Link different payment channels, ensuring money moves smoothly between banks, businesses, and customers.
Licensing and Requirements
- Regulatory Authority: Central Bank of Nigeria
- Examples of companies are Flutter Wave, Remita, and Paystack.
- Application fee: N100,000.00
- Minimum share capital: 2,000,000,000 billion shares
- License fee: N1,000,000.00
Activities
- Card processing.
- Clearing of transaction and settlement agents’ services.
- Non-bank acquiring services.
- Switching services.
Mobile Money Operators:
Provide mobile money services, letting people use their phones to pay for things or send money.
Licensing and Requirements
- Regulatory Authority: Central Bank of Nigeria
- Examples of companies are Opay, Paga, and Palmpay.
- Application fee: N100,000.00
- Minimum share capital: 2,000,000,000 billion shares
- Licensing fee: N1,000,000.00
Activities
- Issuing of Electronic money.
- Mobile wallet creation.
- Pool account management.
- Engage in activities of super agents.
Payment Solution Services:
Recruit agents to offer banking services in communities and provide payment solutions.
Licensing and Requirements
- Regulatory Authority: Central Bank of Nigeria and PTSPs
- Application fee: N100,000.00
- Minimum share capital: N250,000,000.00 million shares
- Licensing fee: N1,000,000.00 million
Payment Terminal Service Providers:
Offer POS services for card payments in stores.
Licensing and Requirements
- Regulatory Authority: Central Bank of Nigeria
- Examples of companies: Interswitch, Fidesic Nig Ltd, etc.
- Application fee: N100,000.00
- Minimum Share Capital: 100,000,000 million shares
- Licensing fee: N1,000,000.00 million
Activities
- POS terminal deployment
- POS terminal ownership
- POS terminal maintenance.
Super Agents:
Employ and supervise agents that offer financial services in local areas.
Licensing and Requirements
- Regulatory Authority: Central Bank of Nigeria
- Application fee: N100,000.00
- Minimum share capital: 50,000,000 million shares
- Licensing fee: N1,000,000,00 million
Activities
- Cash deposits
- Withdrawals
- Bill payments
- Local fund transfers
- Balance inquiry
Payment Solution Service Providers:
Offer payment gateways and portals for businesses to accept payments online. They help companies to collect payments but don’t hold onto the money themselves.
Licensing and Requirements
- Regulatory Authority: Central Bank of Nigeria
- Examples of companies Are Flutter Wave, Pay Stack, and Interswitch.
- Application fee: N100,000.00
- Minimum share capital: 100,000,000 million shares
- Licensing fee: N1,000,000
Activities
- Payment processing gateway and portals
- Merchant services aggregation and collection
- Payment solution development
Non-Activities
- No holding of funds.
- No issuance of electronic money.
- No wallet creation.
READ ALSO: Top 7 Fintech Companies in Lagos 2024
Lending Fintechs
Lending Fintechs are companies that offer quick loans through digital platforms, helping both individuals and small businesses. They provide small loans without collateral, which makes it easier for people to borrow money without long waits or high interest rates. These types of fintech companies only focus on lending through digital channels and don’t handle things like accepting deposits or dealing with investments.
These types of fintech companies make emergency loans accessible to anyone with a digital device. Borrowers usually get their money quickly, sometimes within hours of applying. They also have the freedom to use the borrowed money without restrictions.
Some of these companies also offer loans for purchases, paying for items on behalf of customers who repay with interest over time. Usually, customers need to pay a percentage of the item’s price as a down payment.
The State Ministry of Home Affairs regulates these companies. To operate, they need to meet specific requirements, like an application fee and having a minimum amount of paid-up share capital.
Licensing and Requirements
- Licensing Authority: State Ministry of Home Affairs.
- Application fee: N350,000.00
- Minimum Paid-up share capital: 20,000,000.00 million shares
Savings/Investment Platforms
Savings and Investment Platforms are mobile apps that help people save money by offering reasonable interest rates. Some savings and investment platforms include PiggyVest, Cowrywise, Farmcrowdy, Kolopay, Risevest, and PorkMoney.
These types of fintech companies are new, starting just over five years ago. They mix ideas from regular banking, piggybank saving, and stock investing.
They let you save money in different ways, with better interest rates than regular bank accounts. Their main aim is to encourage saving habits. You can set savings goals or lock your money away for a while, like a current account, but with better rates.
In Nigeria, the dollar often goes up against the naira. These platforms also let you buy and save dollars, which helps keep your money’s value during inflation and might even make it grow. Lately, they’ve added options for investing in businesses, with 15% to 40% returns. You can invest in Agriculture, Real Estate, Fixed Income, or Transportation and get returns within 6 to 18 months.
Blockchain/Cryptocurrency
Blockchain and Cryptocurrency Platforms provide digital platforms to exchange, hold, and trade cryptocurrencies and other virtual assets. Fintech companies in this field develop platforms that allow users to trade Nigerian Naira for cryptocurrencies like Bitcoin, Ethereum, and XRP, utilizing blockchain technology. Key players in this sector include Nairaex, Sureremit, Bybit, Nairaswitch, Tanjalo, and Buy Coins.
Licensing and Requirements
Regulation of these platforms falls under the authority of the Securities and Exchange Commission.
Companies seeking to operate in this space are required to pay an application fee of One Hundred Thousand Naira (N100,000.00), maintain a minimum share capital of Five Hundred Million shares (500,000,000), and pay registration and processing fees of Thirty Million Naira (N30,000,000.00) and Three Hundred Thousand Naira (N300,000) respectively.
Conclusion:
In today’s fast-changing world of financial technology, Fintech companies are changing how we handle money, offering new and creative solutions to meet different needs. Digital banks make online banking easy, while payment service providers make electronic transactions more straightforward than ever.
Meanwhile, Fintech lending helps individuals and small businesses get quick loans through digital platforms, making borrowing money easier and promoting financial inclusion. Savings and investment platforms encourage people to save and offer investment opportunities tailored to different economic goals.
Blockchain and cryptocurrency platforms also use advanced technology to allow people to trade digital assets, opening up new possibilities for investing and managing money.
As the Fintech industry grows, it is essential to keep up with the different types of Fintech companies and the opportunities they provide in the ever-changing financial world.
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