Mobile phones have become an important part of our daily living. They have made communication easier and less expensive. Currently, there are over 180 million active telephone lines in Nigeria according to the Nigerian Communication Commission (NCC).
This means there is a huge demand for recharge cards which are used to top up these telephone lines. Contrary to what many people think, recharge card business is still very lucrative in Nigeria provided you have the means and the required effort to run it efficiently. The profit margin may be low but the real gain comes with the number of sales you make and with a huge and ready market available, you can easily make good money in this business.
There are three tiers in the recharge card business, and you can join any depending on your financial strength and the scope of business you want to start. You can either be a dealer, a sub-dealer, or a retailer. Each of these is explained below.
Recharge card dealers are at the top of the chain and usually deal directly with the telecoms companies. Some dealers are so big that they sell to other dealers and in this case, they are called mega-dealers. Dealers buy recharge card pins from the telecoms companies, print them, and then sell to the wholesalers and retailers. To become a dealer in the recharge card business requires huge capital, upwards of 10 million naira. The good thing about dealers is they earn the highest profit margin since they are top of the chain.
Wholesalers get their recharge card supply from the dealers and sell to the retailers and sometimes directly to the end-users. They have good profit margins too but not as high as that of dealers. Recharge card wholesale requires considerable capital to start but what you need is no way near the amount needed to go into recharge card dealership. With as little as 200,000 naira, you can start a business as a recharge card wholesaler.
Retailers are the last link of the chain. They are the ones that get the recharge cards to the end-users. You find them all around, on your street, in shops, markets etc. They buy recharge cards from the wholesalers and then sell to end-users. They have the least profit margin. Setting up as a retailer in the recharge card business is quite easy. You need very little capital to start, as little as 5,000 naira will do.
Apart from selling recharge cards, retailers also sell Virtual Top-Ups (VTU). With VTU, retailers can earn more money from sales of airtime. They buy airtime directly from telecoms companies electronically and then sell to the end-users via electronic transfer without the need for paper cards.
How to Setup a Recharge Card Business
Capital: This is dependent on the level at which you want your business to operate. Dealership requires huge capital while a retail business needs just a little capital.
Pick a Name Your Business: You must be creative when picking a name for your business. The name becomes part of the branding for the business and could be crucial to the survival of your business.
Physical Location for Your Business: Since you will be dealing with people directly, there must be a physical location for your business where people can meet you to transact. A dealership business will require a physical store/shop in a strategic location such as big markets, city centre, business districts and so on. A wholesale business will also need a shop/physical store in a strategic location.
Retail business does not need a physical store/shop but having one is a plus. Retailers can operate anywhere so far there are people around. You can find them in the neighbourhood, on the streets, in the markets mingling with people and so on.
Register Your Business: Depending on the scale of your business you may need to register with the government to give your business a legal backing. Dealers and large scale wholesalers need to consider this but retailers don’t have to. Retailers don’t need any license or permit to operate.
Another aspect of the recharge card business where you can make money easily is the printing of the recharge cards. Like I said earlier, Dealers are the direct link to the telecoms company from which they buy the recharge card pins. The burden of printing the cards rests on the shoulder of the dealers. You can strike a deal with a dealer and take the burden of printing the recharge card off his shoulder.
The dealer will sell you recharge card pins at a reduced price, then you print and sell to end-users, retailers, wholesalers, and even dealers depending on how big your recharge card printing business is. You can easily purchase pins from dealers online and have them send you the pins via e-mail. To engage in recharge card printing business, what do you need?
How to Setup a Recharge Card Printing Business
Setting up a recharge card printing business is quite easy. To start, you need capital to purchase recharge card pins in bulk from dealers, you need a computer with internet access, a printer that will do the printing of the recharge cards, and software that decrypts the pin codes sent to you by the dealer. If you cannot afford a computer and a printer, you can talk to a trusted dealer. The dealer will give you a device that can print recharge cards to help your business.
You may be tempted to assume that there isn’t much profit in the recharge card business but I’m telling you not to. The profit margin is not much but the trick lies in the volume of sales. Dealers make the most profit as they make huge sales daily and have the highest profit margin. Retailers don’t make much in profit since they are the last link of the chain. If you are looking to set up a recharge card business, now you know how to go about it.