Palmpay, a Chinese-backed fintech app, has announced a strategic partnership with Jumia, a leading e-commerce platform in Nigeria, to allow Palmpay customers to pay for products on Jumia directly from their accounts. This partnership marks a significant milestone in the Nigerian fintech landscape, as internet transfers continue to dominate the e-payment space.

According to data from the Central Bank of Nigeria, internet transfers accounted for 51.91% of total e-payment transactions in the first half of 2024. This trend is expected to continue, with Palmpay building payment methods for its 30 million customers as bank transfers represent an easy payment option for users. In 2023, transfers accounted for 45% of online retail payments.

A Palmpay spokesperson revealed that the company has over a hundred partners that it is working with for this online payment solution, highlighting the fintech's aggressive expansion plans. The partnership with Jumia, which recorded 2.6 million orders during its month-long Black Friday campaign – an 18% increase from 2023 – offers Palmpay an opportunity to boost its payment margins. By enabling customers to pay directly from their accounts, the fintech eliminates the fees charged by card processors like Verve for each transaction.

The partnership comes five months after Jumia hired Anthony Mbagwu, an ex-Palmpay employee, to lead the Nigerian arm of its fintech, JumiaPay. According to Jumia's 2023 filing, PalmPay is one of JumiaPay's biggest competitors. This move is seen as a strategic play by Jumia to strengthen its position in the Nigerian fintech market.

Palmpay entered Nigeria in 2019, backed by a $40 million seed round from Tecno. The fintech rose to prominence in 2023 when a cash crunch made Nigerians turn to fintechs as traditional banks struggled with the surge in online transactions. This partnership with Jumia is expected to further solidify Palmpay's position in the Nigerian fintech space.

The implications of this partnership are far-reaching, with experts predicting a significant shift in the Nigerian e-commerce landscape. As fintechs continue to build payment methods on the pay-by-bank feature, traditional banks will need to adapt to stay competitive. The partnership between Palmpay and Jumia serves as a catalyst for innovation in the Nigerian fintech space, driving growth and adoption of digital payment solutions.

In conclusion, the partnership between Palmpay and Jumia marks a significant milestone in the Nigerian fintech landscape, with far-reaching implications for the e-commerce space. As fintechs continue to drive innovation and adoption of digital payment solutions, traditional banks will need to adapt to stay competitive. The future of digital payments in Nigeria looks bright, with partnerships like this driving growth and innovation.