Understanding the Factors Behind Zoto's Shut Down

Zoto was a Nigerian fintech startup co-founded by Emmanuel Oshone Ikazoboh and Vipul Sharma in 2015. Self-named “Nigeria’s fastest growing payment platform,” the company offers various mobile payment solutions, such as airtime and data purchases, bill payments, and digital transfers with the Zoto wallet.

Zoto’s Business Model

The company started out with a focus on providing digital mobile recharge solutions. Over time, their services expanded to include betting and movie tickets, mobile data purchases, and electricity bills, with the ultimate aim of becoming a central marketplace for mobile payments.

Inspired by the soaring success of Kenya’s M-PESA, Zoto’s co-founders replicated the business model in Nigeria. Headquartered in Lagos, the company’s services received a positive response from the immediate target market. The mobile app ranked No. 1 on app stores, received high ratings, and got positive user reviews. Zoto also partnered with other IT-based companies, which granted them hassle-free API integrations. The business also received backing from major telecommunication providers and banks.

Zoto’s Financial Backing

In an interview, Emmanuel revealed that the company was privately funded, with strong backing from the Mahindra Group, an Indian conglomerate worth billions. As of 2018, the company was in the process of raising series B funding. Its seed round and other subsequent rounds were not publicly disclosed.

The Growth and Expansion of Zoto

Zoto recorded a groundbreaking number of one million users in September 2017. They processed up to 5 million transactions in the same year, intending to triple the amount in the next year. Launched when Nigerians were gradually transitioning from purchasing airtime printed on paper and scratch cards, Zoto was a welcome initiative. The mobile app was made available to Android users first and iOS users at the end of their debut year. Users were required to sign in by setting up a profile, which included their bank card details. The app saved this information and used SSL 128-bit Norton encryption to keep user data safe.

Its user acquisition strategy majorly involved incentivization. Users got free 100 naira airtime after their first recharge. They could recharge for their family and friends. Its gamified referral system allowed users to claim discounts and cashback after successful referrals. These discounts and bonuses were collectively called Zoto Cash. Transaction histories were recorded in-app to allow users to track their expenses. Customer service options were also available on the app.

Continued Growth and Future Plans

When Zoto announced the redesign of its app at a press conference in 2017, it coincided with the addition of new services. The new model boasted machine learning intricacies and other appealing features, placing it at the forefront of mobile payment solutions. As a limited offer, users could access it for N1.

At the start of 2018, Zoto’s co-founder, Emmanuel, affirmed the company’s focus on solving problems unique to the Nigerian market. He also stated that the business model would soon be replicated in other West African countries.

“In the near future, we plan to expand vertically and horizontally by adding more categories and increasing the number of merchants in each category. This will help us provide better payment experience to our users and make us an indispensable channel for payments. We also plan to disrupt merchant payments, credit ecosystem, P2P transfers and other financial service categories for years to come”.

With these, Zoto planned to establish itself as a payment powerhouse for Nigeria and Africa for years. However, several sources reported signs of the company’s shutdown became visible in 2018.

Ripple Effects of Zoto’s Shutdown