It is no new knowledge that electronic payment provides another way to send and receive money online, pay for goods offline and Nigeria has witnessed a surge in the adoption of the service over the last few years for convenience and ease of transactions.
In January alone, electronic transactions hit a whopping N10.89 trillion nationwide according to NIBSS report, a 29% increase in compared to N8.41 trillion recorded in January 2019. The overall electronic payments figure is an aggregate of transactions carried out on Point of Sale terminals, mobile inter-bank transfers, NIBSS’ Instant Payments, e-bill payments and central pay across the country.
However, in spite this significant adoption, there is still a sizable number of people (and we are not talking about unbanked population here) with fears, who are not convinced to get on the bandwagon and explore e-payment platforms in their daily need to transact.
Some of these myths that keep holding people back from enjoying the many benefits that come with electronic transactions are:
Trust: A major concern that still deters many consumers from using digital payment channels, mostly because of the perceived security risks due to exposure of their paying instruments or account details, which they believe could lead to financial losses.
Comfort with cash transactions: Many are comfortable with using cash to complete transactions and are not in a hurry to make changes, despite the ease and convenience of using digital channels.
Transparency: Many still believe or have a perception that having every transaction be tracked or monitored could invite unnecessary scrutiny or higher taxes or reveal transactions that they will otherwise keep under the radar.
Fees: Merchants and Consumers avoid additional fees imposed for using electronic channels. Although this is gradually changing, there is still the perception that these channels are expensive so people find ways to avoid the charges.
Despite these challenges, Nigeria continues to witness steady adoption driven by the ecosystem which includes regulators, banks, Fintechs and other Financial Service Providers. It is clear that the space will continue to grow as we see simpler solutions, gains in Financial Inclusion and stronger value propositions for Merchants and Consumers.
The following are some of the recent game-changing innovation that has driven electronic payment adoption in Nigeria in recent years;
USSD banking: The Unstructured Supplementary Service Data (USSD) pioneered by e Tranzact and popularized by the Guarantee Trust Bank (GTB) is one of many payment innovations that have transformed the way many Nigerians transact. In 2018, people using interbank instant payments on USSD platforms grew by 35% to N261.7m. The USSD technology is perfect for a country like Nigeria seeing how it offers a simple browsing experience through a menu system on any mobile device. It is technology for anyone and everyone.
PoS and Agency banking solutions: Agency banking has been a major contributor to financial inclusion in the country. A form of branchless banking that is cost-effective and easy in terms of providing financial services mostly with the use of POS terminals and now expanded to mobile transfers and more.
Instant Transfers: A platform that allows for immediate transfer of value or funds to the beneficiary. IN 2019, bank’s instant transfers’ value was at N442tn with over 90million transactions nationwide. The rise in preference for instant transfers has resulted in a steady decline in the use of bank cheques, and cash withdrawals.
Utility Payment Platforms: The digitization of utility payments has been a breakthrough for the tech space and many people have come to enjoy the benefits of paying their utility bills in the touch of a few buttons.
Processing payments electronically, some would argue also lowers cost, as we tend to spend less on paper and postage. Also, the platform can help businesses improve customer retention in comparison with those offering only traditional means of payments.