A customer walks into a shop or visits an e-commerce platform to purchase an item. After using a card to complete the payment transaction, a message indicating that the transaction is successful pops up on the customer’s phone.
The customer leaves satisfied with his purchase, while the business owner receives the payment.
Millions of SMEs depend on multiple scenarios every day to survive and grow. Yet, as simple as the process looks on the outside, it requires several steps involving external parties, which take days to conclude.
Given how crucial this process is to the survival of SMEs and the health of the economy, it needs to be as frictionless and accessible as possible.
Acquiring for SMEs: Numbing the headache
An acquirer, also known as a merchant acquirer or a payment gateway, is a company that collects physical or online card-based payments on behalf of retailers and sends them to the banks that issued the cards (card issuers).
This communication passes through the relevant card scheme (Visa, Verve, MasterCard, Discover, etc.) before routing to the issuers, whereby the cardholders’ accounts at the banks will be debited for the transaction amount.
The issuers credit the Acquirer with the total value of successful transactions over a set period (usually a day), then, the Acquirer credits the bank accounts of the relevant SMEs.
Depending on the deal negotiated with the Acquirer, the cycle from POS (Point of Sale) payment to money in the bank can take between a few hours to four days for the SME; this poses a significant set of challenges for many small businesses.
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For a large business, a 4-day delay is likely not a big deal. For an SME, this could mean a cash flow disruption that affects its ability to restock and cover significant expenses.
There is also the risk posed by the dreaded chargeback – a successful payment returned by the card scheme due to several factors. Five or six daily chargebacks for a large business is a running cost.
For an SME? A death sentence
In addition to these problems, there is also the fact that conventional acquiring focuses almost entirely on card payments.
An estimated 36 percent of Nigeria’s population remains unbanked, with an estimated N17 trillion of unbanked money in circulation. This is a problem that payment solution providers like Unlimint hope to solve by widening the scope of available payment channels.
How can simplified acquiring help SMEs?
Keeping these risks, challenges, and opportunities in mind, a new generation of payment technology solutions is emerging, focusing on easing the process of acquiring for Nigerian SMEs. These solutions bring together the ease of rapid payment settlement, a vast expansion of available payment channels, and the provision of payment channels specifically designed to include some of that 36 percent unbanked population in the digital economy.
At the vanguard of this new generation is Unlimint. In addition to rapid payment settlement that appeals to SMEs, the payment solutions provider also provides a frictionless cross-platform payment integration service supporting up to 1,000 alternative payment methods from anywhere in the world.
Essentially, SMEs can receive payments through multiple payment methods. They will not have to use different technology platforms for these multiple payment methods because they will have access to everything in one place via a single efficient integration.
The expectation is that by integrating Unlimint into their payment systems, Nigerian SMEs will have a turnkey payments solution that leaves them free to focus on growth and core business expansion activities. Having access to up to 1,000 payment methods increases their payment channel redundancy and widens their addressable market.
Goott is director, Unlimint Africa
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