Is Using Debit Cards a Good Strategy for Neobanks in Nigeria? Carbon Discontinues its Service

The Nigerian fintech landscape has neobanks reevaluate their strategies concerning the usage of debit card offerings. Recently, the fintech giant Carbon made headlines by discontinuing its debit card operations in Nigeria, just two years after its launch. 

This has caused discussions on whether deploying debit cards is a viable strategy for neobanks operating within the country.

Carbon’s co-founder and CEO, Ngozi Dozie, in a candid admission on Substack, hinted that the decision to roll out debit cards might not have been the wisest move for the company. 

Although Dozie didn’t pinpoint the exact reasons for this strategic pullback, he suggested that the high operational costs, which were pegged to the US dollar, and the current foreign exchange challenges played significant roles. 

“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 wrote.  

Reflecting on the industry’s rush towards pushing debit cards, Dozie questioned the universal application of this strategy among neobanks. He noted that many founders, himself included, often leap before looking, driven by insufficient analysis and an eagerness to compete with traditional banks. 

In Nigeria, where many consumers already possess multiple debit cards, the introduction of yet another card may not meet an urgent need but instead add to the clutter. 

Dozie’s retrospective thoughts reveal a misstep in strategy—prioritizing the launch of a debit card to emulate conventional banks’ trust signals rather than focusing on novel, more digitally aligned services that could differentiate Carbon from its competitors.

The scenario with Carbon contrasts with other fintechs like Kuda, Moniepoint, and OPay, which have also launched debit cards but opted for partnerships with Verve, a local card provider. 

“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. 

“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 wrote. 

He recommended that fintech startups looking to launch a debit card thoroughly analyze the industry before venturing into it.