FairMoney Microfinance Bank, a Nigerian consumer-focused digital lender, is leveraging Point-of-Sale (PoS) terminals to address one of the most persistent challenges in lending: accurately assessing business creditworthiness.

While competitors race to deploy millions of payment terminals across the country, FairMoney has deployed approximately 100,000 devices and says it is deliberately targeting merchants whose payment histories can eventually translate into 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 true value of a merchant relationship lies less in transaction fees than in the data those transactions generate. For FairMoney, the PoS terminal is no longer simply a payments product — it functions as an underwriting tool.

This approach marks a departure from the trajectory that defined the Nigerian PoS industry's growth, but it speaks directly to one of the country's most entrenched financial gaps. Nigeria has tens of millions of small businesses, yet the vast majority operate outside the formal credit system because they lack the financial records that traditional lenders require to assess risk. The International Finance Corporation has consistently identified Nigeria as having one of the largest MSME financing gaps in sub-Saharan Africa, with the shortfall running into hundreds of billions of dollars.

Two decades of PoS expansion

Over the past twenty years, PoS terminals have evolved from a niche payment channel into one of Nigeria's largest financial distribution networks. Transaction values climbed 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.

Fintechs have driven much of that expansion. Companies such as Moniepoint, OPay, and PalmPay have spent years aggressively building their merchant networks, turning PoS terminals into critical infrastructure for millions of small businesses while constructing some of Nigeria's fastest-growing payment operations.

As of March 2025, there were more than 5.90 million active PoS terminals nationwide. Moniepoint alone reports 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 translate into more merchants, higher payment volumes, increased transaction fees, and a larger share of Nigeria's merchant-acquiring market. For FairMoney, the calculus is similar on the fee-income side — but the deeper priority is data generation for lending.

From consumer lending to SME banking

Founded in 2017, FairMoney built its business on unsecured consumer loans before discovering that many borrowers were channelling those funds into 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 pivot. In 2023, the company expanded into SME banking, offering transaction accounts, PoS terminals, and business loans rather than 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 generates a financial record. Daily sales volumes, customer activity, seasonality, and cash flow patterns all become visible, giving FairMoney a real-time picture of how a business operates — the kind of documentation that banks have historically demanded but that most Nigerian micro-businesses have never been able to produce.

"We have clearly seen that the loans where we have payment data perform better than where we don't," Obiekea reiterated. "Our PoS strategy is more specific and targeted to the merchants and SMEs that we think are lendable."

The outcome is a deliberately selective merchant acquisition strategy. Rather than enrolling every merchant or agency banking outlet, FairMoney concentrates on businesses it believes can eventually become quality borrowers.

The lender reported disbursing more than ₦150 billion ($109.07 million) in loans in 2025 and now processes nearly 15,000 loans daily, with consumer lending still representing a core component of its operations. 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 steering clear of 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.

Deposits now fund lending

Better underwriting addressed 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 under a state MFB licence. That licence restricts the lender's physical operations — including branch openings — to a single 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 expanding deposit base has pushed FairMoney to identify new avenues for deploying capital. Beyond consumer and SME loans, the lender now finances motorcycles, tricycles, and vehicles, with plans to expand into phones and other consumer 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 scales, the lender said it is working toward obtaining a national MFB licence commensurate with its growth ambitions. A national licence would enable FairMoney to open physical branches across the country and would raise its minimum capital requirement to ₦5 billion ($3.64 million). That upgrade would also place FairMoney on more competitive footing with nationally licensed rivals like Moniepoint, which holds a microfinance banking licence and has pursued its own national expansion.

FairMoney's PoS strategy reflects a broader shift in how fintechs are conceptualising payments. Transactions may be the vehicle for customer acquisition, but lending is what produces sustainable returns. Under that framework, the PoS terminal is no longer the end product — it is the data-collection instrument that underwrites the next loan.