The verdict in three sentences
On a thin-margin shop, one extra point of commission absorbs 12 to 20 % of net margin. Seriously comparing Paystack and Flutterwave before wiring your checkout can save hundreds of thousands of naira a year. The right choice depends on your payment mix, volume and the settlement speed you need.
What a gateway really charges
Headline rates ("from 1.5 %") often hide caps, fixed fees, transfer/payout fees and settlement delays that change the whole calculation.
| Gateway | Fee/transaction | Cap | Payout fee | Settlement delay |
|---|---|---|---|---|
| Paystack (local cards) | ~1.5 % | NGN 2,000 cap | Low/free | T+1 |
| Paystack (international) | ~3.9 % + fixed | none | Low | T+1 to T+2 |
| Flutterwave (local) | ~1.4 % | NGN 2,000 cap | Variable | T+1 |
| Flutterwave (international) | ~3.8 % | none | Variable | T+1 to T+3 |
| Bank transfer (direct) | ~0.5 % or flat | NGN 100 cap | Low | T+0 to T+1 |
Actual rates depend on volume negotiation: above NGN 10,000,000/month most gateways will discount.
Simulation on NGN 5,000,000 revenue/month
Here is the impact of a simple commission gap on a shop collecting NGN 5,000,000 a month.
| Commission rate | Monthly fees | Annual fees | Gap vs 1.8 % |
|---|---|---|---|
| 1.8 % | NGN 90,000 | NGN 1,080,000 | baseline |
| 2.5 % | NGN 125,000 | NGN 1,500,000 | +NGN 420,000 |
| 3.0 % | NGN 150,000 | NGN 1,800,000 | +NGN 720,000 |
| 3.5 % | NGN 175,000 | NGN 2,100,000 | +NGN 1,020,000 |
In other words, moving from 3.5 % to 1.8 % frees up NGN 1,020,000 a year — often more than a part-time salary.
Strategy: route each payment to the cheapest rail
The best approach is not to pick a single provider but to route intelligently: local cards and bank transfer at the cheapest capped rate, and the gateway only for international cards. This routing can be built once for NGN 800,000 to 1,600,000 and cuts the weighted average commission from 3 % to under 2 %.
Mini case study
Chidi runs a fashion shop in Lagos, NGN 5,200,000 revenue/month, 22 % net margin, about NGN 1,144,000. He pays everything through one gateway at 3.2 %, i.e. NGN 166,400/month in fees.
By routing local cards and bank transfers to the capped rail (85 % of volume at ~1.2 %) and keeping the gateway for the remaining 15 % (international cards), his average commission drops to 1.5 %, i.e. NGN 78,000/month. Saving: NGN 88,400/month, or NGN 1,060,800/year — nearly 9 % of net margin recovered. The routing build (NGN 1,200,000) pays back in about 11 months.
Need a professional website?
Kolonell builds websites that attract clients, optimized for the Sénégalese market. Free quote in 2 minutes.
Become a Kolonell referral partner
Know merchants bleeding on payment fees? The Kolonell referral partner programme pays you when you introduce a client: 15 % + 5 % recurring on a showcase site, 12 % on an e-commerce project, 10 % on a marketplace and 8 % on an institutional project. One introduction, a real commission.
FAQ
Which gateway is cheapest in Nigeria in 2026?
None is cheapest everywhere. Bank transfer and capped local-card rates beat the standard gateway rate; gateways stay useful for international cards and multi-rail coverage.
Can you negotiate gateway fees?
Yes. Above NGN 10,000,000/month in volume, Paystack and Flutterwave typically shave 0.3 to 0.8 point off the rate.
How much does smart payment routing cost?
Budget NGN 800,000 to 1,600,000 once. It often cuts the average commission from 3 % to under 2 %.
Do fixed fees really matter?
On small baskets (under NGN 1,500), a NGN 100 fixed fee is over 6 % — sometimes pricier than the variable commission itself.
Does settlement delay change anything?
A T+3 payout instead of T+0 ties up your cash: on NGN 5,000,000/month, that is roughly NGN 500,000 permanently locked.
Let's talk about your project. We'll audit your payment fees for free and estimate the possible yearly saving. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
