In a move many experts will consider unprecedented in the payment space in Africa, Unified Payment (UP) has announced a new product that enables merchants receive payments from electronic transactions within an hour.
The product known as UP Hourly Settlement Service (UP-HSS) ensures that merchants get their monies on an hourly basis with full settlement reports that aid them in reconciling their daily sales. Settlement can be done for any merchant irrespective of the card brand used to initiate the transaction or the processor of the card. This is against the existing next-day settlement after they have parted with goods or services, otherwise known as T+ or Transaction Day + 1.
Unified Payment unveiled UP-HSS in Lagos on Wednesday, 27 June, 2018.
According to Agada Apochi, managing director of Unified Payment, UP-HSS which is integrated at an industrial level is a first for the payment space in Africa and was born by the need to encourage retailers and merchants to adopt electronic payment (epayment).
PoS devices are popular among merchants and retailers in Nigeria. Data from Nigeria Bureau of Statistics shows that the value of electronic payment transactions through Point of Sale (PoS) terminals rose by 39 percent, year-on-year, to N297 billion in the first two months of 2018. Month-on-month value of PoS dropped in January and February. The value of transactions declined by 9.5 percent to N152 million from N167.6 million in December 2017 and again by 4.8 percent to N144 billion in February.
Apochi noted that Nigeria is only utilising 10 percent of the potential of epayment with regard to the cashless economy.
“A big need for merchants is access to funds,” he noted.
Prior to UP-HSS, merchants could only receive settlement from their transaction after 45 days. Unified Payments rallied other stakeholders in the industry to reduce the days to 24 hours. Merchants however still complain that settlement never gets to them on time.
Prakesh Keswani, deputy managing director of Artee Group, owners of SPAR franchise in Nigeria, said in reality, settlement could take more than four days, especially when there was a holiday.
Victor Etuokwu, executive director at Access Bank, also agreed that a major challenge to the growth of electronic payment in Nigeria is the lack of buy-in by merchants because access to funds is not available at the time they need them.
They see little incentive in accepting cards over cash which is instant. Without a reliable transaction settlement system, merchants heavily leaned towards cash payment from their customers. Apochi predicted that adoption of UP-HSS will see a switch from cash to electronic payment to 80 percent in six months.
“The greatest incentive to retailers is timely access to their funds,” Apochi said.
UP-HSS is collaborating with four Nigerian banks including Access, Diamond, UBA and FCMB. Merchants who are customers of these banks can easily leverage the service.
“We actually carried out a test-drive of the product with our merchants,” Chuks Nweke, an executive at United Bank for Africa (UBA) said. “This is a product that works.”
Apochi is hoping that all the twenty-one banks in Nigeria also embrace UP-HSS.
