FairMoney Microfinance Bank, the Nigerian consumer-focused digital lender, is using Point-of-Sale (PoS) terminals to solve one of lending’s oldest problems: determining which businesses are creditworthy.
While rivals race to deploy millions of payment terminals across the country, the digital lender has deployed about 100,000 devices and says it is deliberately targeting merchants whose payment histories can eventually become lending opportunities.
“We are not necessarily targeting like two million or three million or one million PoS terminals,” Henry Obiekea, managing director at FairMoney MFB, told TechCabal in an interview.
As payments become increasingly commoditised, some fintechs are discovering that the real value of a merchant relationship lies less in transaction fees than in the data those payments generate. For FairMoney, the PoS terminal is no longer simply a payments product, but an underwriting tool.
This approach stands in contrast to how the Nigerian PoS industry grew.
Over the past two decades, PoS terminals have evolved from a niche payment channel into one of the country’s largest financial distribution networks. Transaction values have grown from just ₦946.22 million ($695,469) in the first half of 2007 to ₦10.51 trillion ($7.73 billion) in the first quarter of 2025.
Much of that expansion has been driven by fintechs. Companies like Moniepoint, OPay, and PalmPay have spent years aggressively expanding their merchant networks, turning PoS terminals into critical infrastructure for millions of small businesses while building one of Nigeria’s fastest-growing payment businesses.
As of March 2025, there were more than 5.90 million active PoS terminals nationwide. Moniepoint alone says it has over one million active terminals processing more than ₦10 trillion ($7.27 billion) in monthly transactions, while OPay says more than one million businesses rely on its merchant services.
For most fintechs, more terminals mean more merchants, higher payment volumes, more transaction fees, and a larger share of Nigeria’s merchant-acquiring market. For FairMoney, more terminals mean more merchants, more transactions, and more fee income.
From consumer lending to SME banking
Founded in 2017, FairMoney built its business on unsecured consumer loans before discovering that many borrowers were using those loans to finance small businesses.
“A substantial number of customers that we had, that were taking loans, were utilising those loans for business activities,” Obiekea said. “You had your sole proprietorships or people that just had side hustles. We were still touching some micro, small and medium-sized enterprises at that point.”
That insight prompted a strategic shift. In 2023, the company expanded into SME banking, offering transaction accounts, PoS terminals and business loans instead of serving entrepreneurs indirectly through consumer credit.
“We thought of it as a way to acquire customers that we can now give our loans to,” Obiekea said. “We give them the PoS terminals, we see their transaction data, and based on that transaction data we can give them loans because we have clearly seen that loans disbursed to customers where we have payment data perform better than those where we don’t.”
Every payment processed through a merchant’s terminal creates a financial record. Daily sales, customer activity, seasonality, and cash flow patterns become visible, giving FairMoney a real-time view of how a business operates.
“We have clearly seen that the loans where we have payment data perform better than where we don’t,” Obiekea said. “Our PoS strategy is more specific and targeted to the merchants and SMEs that we think are lendable.”
The result is a deliberately selective merchant acquisition strategy.
Rather than signing up every merchant or agency banking outlet, FairMoney focuses on businesses it believes can eventually become quality borrowers.
The lender said it disbursed more than ₦150 billion ($109.07 million) in loans in 2025 and now processes nearly 15,000 loans daily, with consumer lending remaining a core part of its business. According to Obiekea, the quality of the lender’s loan book also continues to improve.
“We have several levers and tools that we utilise to drive the defaults lower,” he said.
For now, FairMoney is also avoiding a broad push into agency banking.
“We think that we are more suited. We have the right knowledge and resources to play and win in the merchant space. Our focus is more on merchants than on agents, at least for now,” Obiekea said.
FairMoney is not alone in treating payments as a lending engine.
Moniepoint has built one of Nigeria’s largest merchant-acquiring businesses while expanding aggressively into business credit. The fintech says it has disbursed more than ₦1 trillion ($713.66 million) in loans to small businesses, with roughly 30% of those loans going to repeat borrowers.
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Deposits now fund lending
Better underwriting solved one side of FairMoney’s lending business. Funding those loans was the other. After obtaining a microfinance banking licence in 2021, the company began collecting customer deposits, gradually reducing its dependence on venture capital and debt facilities.
The bank said it has been profitable since 2021, and currently operates a state MFB licence. The licence limits the lender’s physical operations, i.e., the opening of branches, to one state, and requires a minimum capital of ₦1 billion ($727,109).
“We have gone from relying on either debt or equity funding for our loan book to being 90% to 95% funded by deposits,” Obiekea said. “The company is now primarily funded with deposits, and we have lots more deposits than even the loan book.”
The growing deposit base has pushed FairMoney to find more ways to deploy capital. Beyond consumer and SME loans, the lender now finances motorcycles, tricycles and vehicles, with plans to expand into phones and other electronics.
“Given the size of the deposit that we have, there is a need for us to continue to build more sustainable products, so that we can deploy the funding that we have into those products,” he said.
As it grows its business, the lender said it is working on getting a national MFB licence to match the scale of its ambition. This will enable the lender to open more physical branches across the country, and raise its minimum capital to ₦5 billion ($3.64 million).
FairMoney’s PoS strategy reflects a broader shift in how fintechs are thinking about payments. Payments may acquire customers, but lending is what generates sustainable returns. In that model, the PoS terminal is no longer the product but the data collection tool that powers the next loan.
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I am the CEO of 9JAGISTLAND.My name is Adedeji Timothy and my co-owner is Oyekola Damilare.This blog is born out of our passion to educating to people in all aspect of internet life.We are enthusiastic about writing posts and articles online.
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