BusinessDay
NigeriaDecides2023

More Nigerian businesses choose digital payments amid barriers

More Nigerian businesses are willing to accept payment through any of the digital channels than take cash from customers, according to a new report by Duplo, a startup that digitises payment flows for B2B companies.

The report notes that the growth in digital adoption is a steady change and in the nearest future “it could be full-on goodbye cash and cheques, to hello bank transfers and other digitised payments.”

Bank transfers dominate other payment channels including mobile money, debit and credit cards, and cheques.

The Duplo report surveyed over 1000 business owners across four African countries including Kenya, Nigeria, South Africa, and Egypt.

“African businesses, large and small, are the lifeblood of the continent’s economy, and making it easier for more to flow between them should be a priority. The data from the report highlights a much-needed transition from cash-based payments but that is just the beginning. There are still various challenges in the payment process that make it difficult for businesses to maximise opportunities to scale their operations. We need to constantly innovate around these challenges to more effectively position African businesses for the growth they need to power economic growth on the continent” said Yele Oyekola, CEO and co-founder of Duplo.

Despite the growing rate of digital payment channels acceptance in the country, there are barriers that discourage frequent use. These include the wait periods in which transactions have to undergo different loops to be completed, delays in merchant payment, infrastructure barriers, and charges. Irrespective of these challenges, digital payment continues to see traction in adoption.

When asked what they liked about their current payment methods, 29 percent of respondents chose ease of use, 28 percent chose reliability and 18 percent chose speed. More than digitised processes (10 percent), affordability (10 percent), and customisation (5 percent) were also considered attractions.

Read also: ‘Financial inclusion will not improve if Nigeria doesn’t address barriers to ID ownership’

85 percent of respondents chose bank transfers as one of the ways they made payments, compared to 60 percent for cash, 23 percent for cheques, and 17 percent for mobile money. When asked about receiving payments from other businesses, 62 percent said they received payments via bank transfers, compared to 59 percent for cash, 32 percent for cheques, and 15 percent for mobile money.

The report also highlighted that 44 percent of businesses still have to wait more than 24 hours to receive payments from business customers and partners. 34 percent take up to 7 days to receive payments, 17 percent take up to 30 days and 3 percent take more than 30 days to receive business payments. This presents a significant challenge for businesses that are often unable to maximise the opportunities available to them due to cash flow restrictions induced by complex payment flows.

According to the World Bank, B2B payments in Sub-Saharan Africa represent a $1.5 trillion market. However, the process of making and receiving payments remains largely manual, which makes it expensive and highly inefficient for businesses. Invoices are also not standardised and they are typically issued and received manually, which increases the administrative burden on business owners, taking more time and effort that can be invested into their businesses.

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