When customers visit supermarkets to purchase weekly groceries or conduct transactions at POS agents, they set in motion a complex process involving multiple financial institutions. The POS device sends card information to a payment switch or card scheme for approval, usually Visa or Mastercard. Subsequently, the card scheme or switch requests transaction permission from the customer's bank. Once authorized, the bank debits the customer's account and transfers funds to the merchant within 24 hours. Despite the swift nature of this process, the centralized payment system can experience hitches leading to transaction failures or delays due to technical dependencies. Notably, POS transactions in Nigeria must pass through the central switch operated by the Nigerian Inter-Bank Settlement System (NIBSS), which faces periodic outages.

A significant number of banks and financial institutions have turned to POS-based Agent banking as a profitable venture due to unregulated fees on cash transactions at agent locations. Merchants incur MSC (merchant service charge) for accepting POS payments, while financial institutions levy processing fees, driving up transaction costs. Fintech companies are seeking ways to avoid the complexities of POS transactions. One viable solution is for payment companies to establish direct connections with issuer banks for validation, bypassing the NIBSS intermediary. This decentralized approach resembles blockchain technology, allowing direct card transactions with issuer Banks to expedite processing, mitigate failures, and streamline reconciliation processes.

Nigerian fintech firms like Opay and Moniepoint have embraced direct card routing to achieve faster transaction processing and reduce failure rates. However, implementing direct card routing is costly and requires significant technical capacity. Zone, a payment infrastructure firm, has introduced Africa's first regulated blockchain network for payments, enabling POS terminals to send transactions directly to banks without intermediaries. Through Zone's blockchain-powered solution, fintech companies can ensure immediate transaction verification, enhancing reliability and speed in payment processing. This development aligns with the growth strategies of fintech firms navigating Nigeria's robust market.