Rising costs cut eTranzact’s profit by 16% in 2025

eTRANZACT International, one of Nigeria’s leading payment and switching companies listed on the Nigerian Exchange (NGX), saw its profits take a hit in 2025 due to rising transaction, administrative, and marketing costs.

According to the company’s 2025 financial statements, eTranzact recorded revenue of N29.824 billion, a modest increase from N29.505 billion in 2024. However, high operational costs significantly eroded the firm’s earnings. The cost of sales, which encompasses transaction and processing expenses, accounted for 52 percent of revenue, leaving a gross profit of N14.172 billion.

For technology companies like eTranzact, cost of sales goes beyond production. It includes switching fees, settlement and network costs, compliance, third-party fees, fraud prevention, and security expenses. “The payments industry runs on thin margins but enormous throughput,” said Lagos-based technology analyst, Mr. Adebayo Onigbinde. “Maintaining secure servers, databases, and real-time processing systems is expensive. Add bank and card network fees for each transaction, and costs multiply quickly as volume grows.”

Administrative, marketing costs rise sharply

Beyond transaction-related costs, eTranzact faced rising administrative and marketing expenses in 2025. Administrative costs surged 51 percent to N9.239 billion, up from N6.156 billion in 2024. Marketing and sales expenses, sometimes referred to as distribution costs, more than doubled to N930.848 million, compared with N424.096 million the previous year.

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These expenses left the company with an operating profit of N4.003 billion. However, income from finance activities (N258.899 million) and other sources (N1.244 million) offset finance costs of N19.242 million, bringing profit before tax to N4.241 billion. After paying N1.272 billion in taxes, eTranzact’s profit after tax stood at N2.968 billion, representing a 16 percent decline from the N3.52 billion reported in 2024.

Industry context, implications

eTranzact’s results underscore the challenges facing Nigeria’s digital payments sector, where rapid growth in transaction volumes comes with proportionally higher costs. “Tech payment firms must continuously invest in infrastructure and compliance to stay competitive,” Onigbinde noted. “Even modest revenue growth can be offset by higher operational and security costs, which is what we see with eTranzact.”

Investors note that while revenues were steady, margins were under pressure due to escalating expenses. Analysts say this trend reflects broader industry dynamics, including rising bank fees, regulatory compliance requirements, and heightened security demands in digital payments.

The company’s performance highlights the thin-margin nature of payment processing, where high throughput is critical for profitability. Experts suggest that eTranzact will need to focus on cost efficiency, scaling its infrastructure strategically, and exploring alternative revenue streams to sustain growth.

“A better way to optimise revenue and resources is to adopt a cost efficiency mindset instead. Cost efficiency is about reducing the cost of delivering your services, without undermining the services themselves,” said a marketing strategist, Libby Marks.

“A cost-efficient approach improves the overall profitability of a business. That’s true of any enterprise. But it is especially important for businesses that deliver client projects. When you’re managing interconnected and unpredictable client projects, it’s easy to go over scope, over time, and over budget. And that undermines profitability.”

In the Pulse of the Profession 2021 report, the Project Management Institute found 73 percent of projects met their goals. But only 62 percent were within budget and 55 percent were on time. Thirty-four percent of projects suffered scope creep and 12 percent failed altogether.

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“By adding cost efficiency practices into your project management, you will be better placed to predict, monitor and manage project costs – so you can reduce wasted investment and maximise your margins,” Ms Marks noted.

Looking Ahead

While 2025 showed a decline in net profit, eTranzact’s continued revenue growth and strong market presence position it for recovery if it can manage operational costs effectively. As the digital payments sector in Nigeria expands, investors and stakeholders will watch closely how the company balances growth with profitabilit