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Contactless payments: What buying and selling would look like post COVID-19

Contactless payment solution seeks a dispensation where contact is totally avoided.

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Contactless payments: What buying and selling would look like post COVID-19

Thanks to the global pandemic, a lot has changed about consumer buying behaviours. And these changes are more than just customers’ choices of goods and services. Current data trends show a major shift in preferred modes of payments, and this is re-modifying the business landscape.

Bola Asiru, a Principal/Divisional Lead at Mastercard Advisors (Sub-Saharan Africa) said this shift stems from “the hygiene concerns about cash” and has seen a corresponding rise in e-commerce transactions and even a growing dependence on internet connectivity for both work and lifestyle needs.

This can be seen reflected in the fact that some of the companies posting profits in this pandemic are telecommunication companies, e-commerce platforms or alternate payment solutions providers.

READ: XRP plunges more than 10%, biggest daily percentage drop since March 12

Speaking during the American Business Council Economic Update in partnership with Mastercard, Asiru noted that the changes in payment patterns also stems from a rising consciousness that limiting contacts with cash will not be sufficient if payment cards still have to be handled by different parties before payment is made.

In the bid to limit contact, “businesses need to adapt their strategic plans in order to add value to evolving consumer needs,” Asiru noted in his presentation during the virtual conference.

Why contactless payments?

“Contactless technology has proven to be an asset in a world where consumers must limit contact with cash,” says Bola Asiru. And consumers are already itching for this solution. Contactless makes life easier, quicker and safer for micropayments.

The use of POS machines and ATMs in Nigeria currently requires an individual to provide the card for the cashier to swipe, or inserting one’s card into the machine to retrieve cash. After this, the buyer still replaces the card in his wallet.

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Contactless payment solution seeks a dispensation where contact is totally avoided. This means a secure payment method using a debit or credit card, smartcard, or another payment device by using RFID technology or near-field communication, so that the customer can effect payment without the card having any direct contact with the machine with his hand or card.

READ: Urgent need to re-up cybersecurity efforts as digital payments gain popularity

It could also take the form of scanning barcodes to effect payment without any contact. There is no doubt that consumers want to stay safe and this can be seen in the increased usage of e-commerce platforms for convenience and safety.

As businesses seek to protect staff and customers by way of physical distancing, contactless payments will soon become the way to go.

Fear of frauds

A major hindrance to the “cashless society” picture being put forward by the apex bank is the fear of digital frauds.

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Not a few people have lost some money after entering their payment card details into the wrong sites, and this consciousness continues to keep them in the cash era.

Answering questions on this, Asiru noted that despite the fears, frauds resulting from contactless payments are much lower than is seen in other forms of payments.

He however added that business leaders will have to do more to prevent fraud and drive security on their platforms, especially as traffic is expected to push upwards.

Is Africa ready for contactless solutions?

Among other things, contactless solutions will depend largely on assured security of the space and reliable internet connectivity.

For instance, POS transaction volume and value have reached a 4 year high with N416 billion worth of transactions in July, while Mobile Transactions value also reached a 4-year high at N275billion of transactions. There has also been an increased use of Digital & Mobile platforms, as can be seen in the GDP report where the Telecoms sector posted an impressive growth.

“Our partners in Nigeria are already issuing contactless enabled cards and we are working with our stakeholders to ensure an increase in transaction limits and a deeper penetration of contactless for health and convenience of cardholders and merchants,” Asiru stated.

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Policy framework and strategy

Although contactless cards and payments are already in circulation in several countries, industry stakeholders in Nigeria are yet to define standard transaction limits to be done without pin (Cardholder Verification Method).

Without a standard alignment across the industry, Nigerians cannot get the full benefit of contactless technology, and it falls on the Central Bank of Nigeria to issue a Cardholder Verification Method (CVM) policy on contactless payments, in line with global standards

READ: Leaked email reveal a bank can’t pay GDR dividend due to dollar shortages

Businesses will also need to revalidate their business strategies, with flexible and tactical action plans that will change alongside an unpredictable customer base.

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They would also need to invest in Predictive Analytics “to model future trends and also as a hedge against unpredictable times” and also drive up cybersecurity on their platforms.

What you should know

American Business Council is an affiliate of the US Chamber of Commerce in Nigeria, and is considered the voice of over 50 American Businesses in Nigeria, working with US missions and othe partners to drive trade and investment opportunities.

READ: ABC survey shows US companies contributed over N111 billion to Nigeria in 2017

The body is an advocacy instrument to promote development of commerce and investments between the United States of America and the Federal Republic of Nigeria, and holds regular talks and conferences to proffer solutions to foster socio-economic growth.

Ruth Okwumbu has a MSc. and BSc. in Mass Communication from the University of Nigeria, Nsukka, and Delta state university respectively. Prior to her role as analyst at Nairametrics, she had a progressive six year writing career.As a Business Analyst with Narametrics, she focuses on profiles of top business executives, founders, startups and the drama surrounding their successes and challenges. You may contact her via [email protected]

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Financial Literacy

Steps to take to bag international scholarships

Here are the steps you should take if interested in pursuing international scholarships.

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United Kingdom opens window of job opportunities for international students

Studying abroad gives you exposure among many other things, and that is precisely why many Nigerians have been looking for ways to study abroad. However, not everybody is privileged with the resources to study overseas and this is where the international scholarship option comes in.

If you are interested in studying abroad and don’t have enough funds, you should consider applying for international scholarships. This article lists the steps you can take to bag international scholarships but before delving into that, here are some types of scholarships available to you as an international student:

  • Location-based scholarships
  • Course or program-based scholarships
  • Sports-related scholarships
  • Research-based scholarships
  • University-funded scholarships
  • Organization-funded scholarships
  • Government-funded scholarships

Having discovered the types of international scholarships available to you, here are the steps you should take to bag any of these international scholarships.

Research: Research is vital if you don’t want to miss out on good opportunities or make mistakes during your application. Research scholarship opportunities available in your prospective college or location and be on the lookout for hidden scholarships.

Check your eligibility: Having done thorough research and discovered the available scholarship opportunities, check to see if you are eligible for them. Many international scholarships have their criteria and requirement, so you should confirm that you are the right fit first.

Get the required documents: After confirming your eligibility, you should get the necessary documents. If the scholarship requires you to write an exam, prepare for the exam, write a good statement of purpose and prepare all other documents.

Start your admission process: Some international scholarships require that you start your admission process and probably get the admission before starting your scholarship application.

Contact past scholarship winners: You might want to contact the previous scholarship winners to know what they did right and how you can learn from them.

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Apply for the available scholarships: The last step is to apply to every available scholarship.

The best way to get funds for your undergraduate, postgraduate, or PhD pursuits abroad is by applying for international scholarships. If you do thorough research, you can find fully funded scholarships that won’t require you to pay any amount. One of the essential steps to getting an international scholarship as a Nigerian is staying abreast of current information and this will require you to network with others.

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Why the proposed Borno power plant may not materialise 

The glaring security challenge cannot be overlooked in considering a major power plant project in Borno State.

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Only a few days ago, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, led a delegation to Borno State to meet with the Governor of the State, Babagana Zulum.

In the conversation with Zulum, Kyari promised the establishment of a gas-fired power plant in Borno State within a maximum of 4 months to solve the recent blackouts that resulted from insurgents cutting off Borno from the national grid since January this year.

In Kyari’s words, “We have talked to each other and we think it’s very possible to establish a dedicated power plant in Maiduguri which will serve current needs of power supply not only in Maiduguri but to other parts of the neighbouring cities.”

Yet, there is a significant possibility that the power plant promised by Kyari may not materialize for many reasons, the first of which is security. In the meeting with Kyari, Governor Zulum had noted: “The ongoing insurgency has cut off the entire Borno from the national grid in the last three months. We put all our efforts and restored it back… but unfortunately, after 48 hours, the same group of insurgents went back and destroyed the main tower again.”

This glaring security challenge cannot be overlooked in considering a major power plant project in Borno State, particularly noting that the State and its surrounding communities have been the hot zone of insurgent and terrorist attacks by Boko Haram insurgents since 2009. Borno, Yobe and Adamawa have particularly been states where the insurgents have set up shop and carried out various activities, including kidnap, extermination of entire communities, burning of markets and religious buildings and the attack on the United Nations compound, in each case claiming tens or hundreds of innocent lives.

One report reveals that at least 37, 500 people have been killed by the insurgent group since May 2011, a modest number, some say. Also, till date, some of the secondary school girls kidnapped in the April 2014 Chibok incident are yet to be returned to their families. It is then bewildering how Kyari intends to see to the construction and operationalizing of this gas power plant.

Additionally, while the Minister of Petroleum for State, Chief Timipre Sylva, announced last year about the discovery of oil and gas deposits in the North, we have not seen any exploration and production kick-off. It then begs the question of where the gas for the Borno power plant intends to be sourced. The only gas pipeline that runs through the North – the AKK- is still in its first phase of construction out of three phases and has been earmarked at the earliest, to be completed in 2023 – not counting the typical delays the project will experience along the way.

Should the AKK by some stroke of luck materialize much earlier than the target date, the pipeline route is a considerable distance from Borno. It runs the route of Ajaokuta-Abuja-Katsina-Kano, its endpoint, a striking 481km from Borno State. Thus, there would have to be construction of a tie-in pipeline almost as long as the AKK from Kano to Borno State to get gas to Borno.

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Optimists may reference the oil and gas discovery in the North and how production may start soon, thus obliterating the need for a 481km pipeline. This optimism however is not well-founded, as insecurity has been shown to be a major risk to oil and gas projects everywhere in the world. One of the major reasons the Trans-Saharan Gas Pipeline proposed to run from Nigeria to Algeria was abandoned was due to security challenges posed by Nigeria’s Movement for the Emancipation of the Niger Delta (MEND), the Tuareg guerilla movement in Niger and other insurgent groups along the proposed route of the pipeline.

These increased the risks across board, including for completion and operations through the lifecycle of the project. As such, failing to fix the security threats in northeast Nigeria makes any proposed gas plant project a pipe dream. Transporting gas via LNG trucks is not a better option, given that the drivers and their cargoes would be in danger of being kidnapped, shot at or bombed. The risks for both personnel and investors are high.

In any event, promising a power plant in 4 months for the people of Borno is unconscionable, since a typical gas power plant will take between 1 to 6 years to construct in relatively peaceful regions. What the government needs to do instead of making promises it cannot keep is to work arduously to fix the security challenges in Northern Nigeria and at the same time consider using decentralised solar power to provide power supply to homes, government institutions, schools and businesses while plans to produce gas in the region or transport gas to it are underway.

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