Going cashless will enable Nigerian businesses grow faster – JumiaPay MD

In recent years, cashless transactions have been on the rise in Nigeria, even according to official data but many businesses are yet to embrace it and the possibilities it offers. With Nigeria’s recent move towards an even more cashless economy, they might have even less choice. Adedamola Giwa, managing director, JumiaPay Nigeria in this interview with Caleb Ojewale, talks about the prospects that digital payments hold for businesses that decide to do away with being cash driven. Excerpts:

Looking at businesses and their adoption of electronic payments, what is your appraisal of the current level of adoption in Nigeria?

We have made huge progress with the adoption of electronic payments in Nigeria through the concerted efforts of banks, other financial institutions, payment companies, financial technology companies (fintechs), the Central Bank of Nigeria (CBN) and other stakeholders in the payment ecosystem.

If you visit most neighbourhood stores, especially in urban cities, you will find a POS machine and be able to make payments with cards, instant bank transfers or via QR. Thanks to e-commerce marketplaces like Jumia, you cannot drive for five minutes in any of our major cities without seeing a delivery bike or van on its way to fulfill an order made online. We have also seen an increase in the adoption of social commerce, where businesses now leverage social media platforms like Instagram and Facebook to promote and sell their goods and services.

To put this in perspective, a recently released NIBSS report shows that cashless transactions in Nigeria rose by 41.75 per cent to N318.66tn in the first 11 months of 2022. This is very impressive, but there is still a huge gap we need to cover to make sure that the adoption covers all cities across the country, including rural communities.

 There is also a need to ensure our payment platforms always work near-perfectly and there are very clear and easy processes to address possible disputes or errors.

Why do you think gaps exist and what do you think would be required to encourage more businesses to embrace electronic payments while also bridging the gaps that exist outside of the urban areas?

The gaps are multifaceted. One of them is the lack of access, especially in rural communities. According to an EFInA report, as of 2020, 38.1 million of the country’s 106 million (18 years and above) adults or 36 percent of Nigerian adults, remain completely financially excluded. To ensure the adoption of digital payments across the country, the services must be readily available, accessible and affordable to the majority.

There is also the factor of infrastructure. The government needs to invest heavily in critical infrastructures such as internet facilities and electricity to accelerate the rate of adoption of financial services and digital payments across the country. We also need to invest more in awareness and education to ensure our people understand the importance of embracing electronic payment. Bridging the gap will demand continuous and well-coordinated efforts from all stakeholders driven by innovation. That is why I commend the National Financial Inclusion Steering Committee, the Central Bank and other stakeholders involved in the development of the recently released National FinTech Strategy.

The objective of the strategy is to leverage FinTechs for inclusive growth and development while enabling the Nigerian FinTech ecosystem for global competitiveness.

Read also: What CBN’s N22.7trn overdraft-to-debt means for economy

More businesses now have to go cashless in Nigeria, in view of recent developments, what capacity do you think exists to absorb the quantum of interest that will crop up?

The Nigerian financial services and digital payments infrastructure have evolved over the years. I believe we have adequate capacity to provide services to the populace as more people go cashless. However, since the new adoption is expected to come majorly from previously excluded customers at the bottom of the pyramid, each player must evolve their strategy to effectively serve this segment of customers.

These new customers may not be well-educated or digitally savvy, so they would require easy-to-understand and easy-to-use services. Players may have to adopt multilingual call centres and other touch-points to serve customers in local languages. There is also a need to ensure our payment platforms always work near-perfectly and there are very clear and easy processes to address possible disputes or errors.

Above all, with the increase in the adoption of digital payments comes an increase in the threat of fraud and cyber-attacks, so service providers must continue to invest in their fraud prevention and cybersecurity infrastructure. At JumiaPay, we are focused on helping businesses of all sizes receive payment from their customers online. After providing a seamless payment experience on Jumia for many years, we have now been licensed by the CBN as a Payment Solutions Service (PSS) provider, which enables us to offer the same excellent service to other businesses. Our mission is to accelerate the growth of businesses across the country through innovative payment solutions and our unique free advertisement and consumer promotion services.

As more businesses begin adopting electronic payments, what exactly do they stand to gain?

A lot of businesses do not know how much they are losing by not embracing digital payments. For a business that accepts only cash for payments, there are costs associated with cash handling, storage, etc. There is also the risk of robbery or other forms of loss. All of these are mitigated once a business starts to embrace digital payments. Another advantage is better access to credit. Because the payments go directly to the business’s bank account, it is easier for financial institutions to evaluate the business for loans which provides capital for business growth and expansion.

Customers are also prone to spend more with digital payments than with cash. There is a limit to the amount of cash you can carry as opposed to accessing funds in your bank account through cards or bank transfers. Digital payments also provide businesses with useful information about their customers, spending patterns, preferences and other details that help the business better serve them and retain their loyalty. One additional benefit that digital technology brings to businesses is the elimination of geographical barriers. By going online, businesses can reach and service customers in different parts of the world. For instance, with the launch of the African Continental Free Trade Area (AfCFTA), Nigerian businesses can leverage this to expand their businesses and access customers across 54 African countries without leaving Nigeria.

When some of these businesses, having seen benefits (of going cashless) and decide to adopt JumiaPay, for instance, why should they pick you?

JumiaPay is a payment platform focused on accelerating the growth of businesses across Africa, particularly in Nigeria. When you use JumiaPay as your payment partner, you gain free visibility and access to free advertisement and promotion on Jumia. We also help our partners deliver their goods to their customers through the Jumia logistics business. Our payment solutions have been tried and tested at scale on the Jumia platform. We have multiple payment options, which provide customers with options such as cards, bank transfers and mobile money. We have recurring payment solutions where customers can easily make monthly payments and subscriptions through card tokenization.

We have also developed payment links that businesses can send to their customers via social media to facilitate easy payments without a website. Beyond all these is our investment in state-of-the-art fraud management infrastructure aimed at protecting our customers from fraudulent transactions. Our focus is to help more SMEs grow by leveraging our experience and expertise as the leading e-commerce group in Africa.

What does the integration process look like with JumiaPay?

We want to ensure that more businesses can operate seamlessly online and receive payments. If you are a business owner and would like to collect payments seamlessly online through JumiaPay while also accelerating your growth with our free advertisement and consumer promotion package, kindly visit our website or via any of the Jumia offices nationwide.

What solutions should be expected from JumiaPay in the new year?

At JumiaPay, we will continue to innovate and set the pace for digital payments across the continent. One of the ways we seek to help businesses grow is by making it easier for their customers to access credit through a ‘Buy now, Pay later’ solution in partnership with our licensed lending partners. Customers would be able to pay a small deposit and spread the remaining payment over a few months. Of course, any new solutions introduced to the market as a compliant institution would be referred to the CBN for review and approval. This is one of the many new and innovative solutions we plan to introduce for the benefit of our customers in 2023.