Nigerian fintech company, Carbon, has announced the shutdown of its debit card operations in Nigeria, just two years after the service was launched. This decision was disclosed by Carbon’s co-founder and CEO, Ngozi Dozie, on Wednesday via a Substack post.
Dozie did not provide specific reasons for discontinuing the card service, but his post hinted that the company might have miscalculated the strategic value of offering debit cards. The ongoing forex challenges, with operational costs denominated in dollars, likely played a significant role in the decision.
“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?” Dozie reflected.
He acknowledged that many founders often proceed with limited information and insufficient analysis. Dozie admitted that if he had thoroughly evaluated the industry, he might not have launched the card operations.
“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 stated.
Dozie also recognized that Nigerians already have multiple debit cards, which further diluted the necessity for Carbon’s card. He speculated that the decision to launch might have been driven by a desire to build trust with customers by mimicking established banks.
“Maybe I had a scoop that if we launched a debit card, customers would trust Carbon more. Because, hey—just like those big banks you trust, I have the same bright, shiny card, marketed on billboards with happy-go-lucky youth with funky haircuts and bright clothing,” he noted.
He advised fintech startups considering the launch of debit cards to critically analyze the industry before committing to such a strategy.
Carbon’s debit card operations began in August 2021, marking a significant step in the company’s evolution from Nigeria’s largest digital lender to a microfinance bank licensed by the Central Bank of Nigeria (CBN). The debit card was intended to allow Carbon account holders to spend funds online and offline via ATMs and POS machines. At the time, Carbon emphasized prioritizing user experience, addressing a common pain point among customers of financial institutions.
“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 stated in 2021.
Carbon aimed to build on its customer base of 3 million users by offering a more comprehensive banking experience. However, the reality of high operational costs and the saturated market of debit card offerings has led to this strategic retreat.
