Nigeria’s agency banking sector has suffered a major setback following the shutdown of Baxi, a prominent point-of-sale (PoS) operator owned by pan-African payments company Onafriq, amid declining revenue, mounting financial pressure and unsuccessful efforts to sell the business.

The closure, announced on October 16, 2026, comes as financial disclosures reveal that Onafriq’s Nigerian subsidiary had outstanding bank overdrafts totalling ₦19.9 billion as of July 2026.

Also read: Lady raises alarm over ₦1.4m allegedly stuck on Baxi platform

The development has raised concerns about the sustainability of agency banking operations in Nigeria, where rising operating costs, intense competition and changing consumer payment habits are putting pressure on providers.

According to Onafriq’s audited financial statements filed in the United Kingdom, the company had been negotiating the sale of its Nigerian agency banking business months before announcing the shutdown.

The proposed transaction involved the sale of the entire operation to an unidentified buyer. However, negotiations remained unresolved as of July 29, when the financial statements were approved.

Onafriq disclosed that its Nigerian subsidiary had entered into a non-binding agreement with a prospective purchaser, according to a report by TechCabal.

The proposed deal covered 100 per cent of the agency banking business and related operations, subject to a definitive agreement.

The shutdown announcement did not clarify whether negotiations had formally ended or whether the prospective buyer had withdrawn from the transaction.

Financial records show that Onafriq Nigeria Payments Limited had outstanding overdrafts of ₦13.8 billion with Zenith Bank and ₦6.1 billion with Stanbic IBTC Bank.

The combined exposure stood at ₦19.9 billion, equivalent to approximately $15 million at the exchange rate cited in the report.

The company’s financial performance also deteriorated significantly between 2023 and 2024.

Revenue from agency services fell by 56 per cent, dropping from $30.4 million in 2023 to $13.4 million in 2024.

Gross profit declined by 65 per cent, from $13.4 million to $4.7 million over the same period. Meanwhile, operating costs directly associated with agency services fell from $17 million to $8.7 million.

Onafriq also wrote off $4.56 million in goodwill associated with its Nigerian payments business in 2024, following an earlier impairment of $2.4 million in 2023.

The write-offs reflected reduced expectations about the investment’s future earnings.

Onafriq attributed the difficulties facing its agency banking business to inflation, naira depreciation, rising operating expenses and shrinking transaction margins.

The growing use of account-to-account transfers has also weakened the economics of traditional offline payment networks, according to a report by ThisDay.

Despite these pressures, Nigeria’s wider PoS industry continues to expand.

Data from the Nigeria Inter-Bank Settlement System (NIBSS) showed that PoS transaction values rose by 79 per cent to ₦18.78 trillion in the first quarter of 2026.

The number of deployed terminals also increased from 2.45 million in 2023 to 5.56 million in 2024.

However, transaction volumes grew by only eight per cent in 2024, pointing to intensifying competition among operators for individual payments.

Major providers, including Moniepoint, have strengthened their positions in the market. Moniepoint reported having more than one million active PoS terminals in Nigeria by 2026.

The figures highlight a challenge for operators: growth in transaction values and terminal deployments does not automatically translate into sustainable profits.

Baxi’s closure marks a significant reversal for Onafriq, which acquired the business in 2021 when the company operated as MFS Africa. The acquisition received approval from the Central Bank of Nigeria in March 2022.

At the time of the acquisition, Baxi operated more than 90,000 agents and processed transactions exceeding $1.6 billion annually.

Its network subsequently expanded to more than 460,000 agents by 2025.

Following the shutdown, Onafriq said it had transferred agents to another principal bank and provided a 30-day window for them to move their funds to a preferred principal bank.

The company also indicated that it would retain its Nigerian payments network and card-issuing operations despite the closure of Baxi’s agency banking business.

For affected agents, the immediate priority is to transfer their funds within the stipulated period and arrange alternative service providers to minimise disruption to their businesses.

The shutdown also highlights the financial pressures confronting fintech companies operating in Nigeria’s expanding digital payments market.

Although electronic transactions and PoS deployments have grown, providers must contend with rising operating expenses, narrower margins and competition from bank transfers and other payment channels.

For the remaining operators, the challenge will be to maintain reliable and affordable services while controlling costs and generating enough revenue to sustain their networks.

Also read: Lady raises alarm over ₦1.4m allegedly stuck on Baxi platform

Baxi’s exit illustrates how a large agent network and a growing payments market may not be sufficient to guarantee profitability when operating conditions become increasingly difficult.