Paystack Launches Virtual Terminals for Faster Bank Transfers

Nigeria-based fintech company, Paystack, is introducing virtual terminals to allow merchants to accept payments through bank transfers. This move is aimed at promoting the rapid growth of its “pay with bank transfer” feature, which is quickly becoming a preferred mode of payment for offline businesses like restaurants and supermarkets.

The Digital Alternative to Physical POS Devices

Paystack’s virtual terminal is a digital-only alternative to physical point-of-sale (POS) devices, which have been widely adopted in Nigeria over recent years. Physical POS devices often cause transaction delays, particularly in high-volume situations like restaurant checkouts. These delays are also common with direct bank transfer alternatives where verbal confirmation of successful payment from managers is required. Paystack, operating in four African countries, believes its new virtual terminals can significantly reduce payment confirmation wait times, ensuring a seamless customer checkout experience.

Features and Benefits of Virtual Terminals

The new feature supports QR code payments, foreign bank cards, and Apple Pay. Business owners can assign virtual accounts to sales agents, allowing them to monitor and verify transactions without needing to contact their manager or access the business’ bank accounts. Paystack CEO, Shola Akinlade, has stated that the virtual terminal makes it easy for businesses to swiftly accept in-person bank transfers while maintaining a dignified customer experience.

Paystack’s Growth Strategy

The virtual terminal is part of Paystack’s broader strategy to expand beyond web-only payment collection. Since its launch in 2015, Paystack has aimed to capture a larger market share by developing innovative products such as a digital storefront for social commerce. This move has been in response to the flourishing Nigerian payments market and the rise of fintech companies offering digital fund collection and settlement services.

The Growth of Offline Payments in Nigeria

Offline payments, including agency banking and POS-based payments, have become a significant factor driving the growth of electronic payments in Nigeria, Paystack’s primary market. Paystack, owned by U.S. fintech Stripe, re-entered the offline payments market last year with the launch of the Paystack Terminal, a point-of-sale device. Now, the fintech is further investing in this market with virtual terminals and bank transfers.

The Rise of Bank Transfer Payments

Paystack first introduced the bank transfer payment method in 2017, which initially supported seven financial institutions. In 2021, bank transfers represented around 12% of transactions on Paystack. This figure has more than doubled to 28% a year later. Since the beginning of 2023, the bank transfer method has surged, accounting for 34% of Paystack payments in Nigeria. This has led to the recent launch of Paystack-Titan virtual accounts, a partnership with Nigerian financial service Titan Trust Bank, which has significantly reduced the latency of bank transfers.

The Future of Paystack’s Virtual Terminals

Despite a challenging start to the year for the Nigerian payments industry due to a currency redesign effort by the central bank, Paystack’s virtual terminals are launching at a time when customers are increasingly adopting the bank transfer method for its convenience and control. Paystack believes that its faster bank transfer channel could help it win over more in-person businesses in Nigeria by offering instant payment confirmation.