Mobile Micropayments and A Truly Cashless Nigeria
Adeola decides to take a walk on a cool Thursday evening after a particularly lazy day. He is on his annual work leave and has enough time to kill. He picks his smartphone and the ‘small phone’, which is really just a feature phone. Adeola walks down the street and explores the area. He passes by a variety store and remembers that he needs air fresheners and soft drinks. He didn’t leave home with his wallet.
He walks into the store, speaks to the owner of the store about buying the things he needs and paying with a bank transfer. She agrees, but with some complaints. It is not how things are done but she allows him to do a transfer via USSD banking with his feature phone. On his way home, Adeola is tired and would rather join a ‘keke’ down the road, but he has no cash and no keke rider will accept a bank transfer for fifty Naira.
According to a research by PwC, China leads the world in digital payments with almost half of the digital payments in the world made in China in the year 2017. In China, physical cash is a rare thing already, with roadside vendors collecting payments via phone apps and people giving alms to beggars digitally, there is almost no need to withdraw cash from an ATM machine. The WeChat app integrates a digital wallet that can be funded directly from bank accounts and can be used to make and receive payments from customers, friends and family. Alipay is another popular digital payment platform used in China.
Back to Adeola’s story, we can now re-imagine him in China and understand how he would have fared better without his wallet. In fact, there is a joke in China that talks about how your phone charger is more important to carry around than a wallet. This isn’t much of a joke again considering how you can buy everything with your mobile.
A few other advantages that digital micropayments and a cashless Nigerian society will bring include:
Micropayment solutions that are successful are not exclusive to China. Launched in 2007, M-Pesa in Kenya allows users to deposit money into accounts on their mobile phones, send money to other users and receive money digitally from other users. M-Pesa has been widely touted as the herald of mobile money and micropayments in the developing nations.
In Nigeria, mCASH by Nigerian Inter-Bank Settlement System (NIBSS) is trying to fulfil the micropayments niche using USSD. mCash is described as being “designed to facilitate low-value retail payments, grow e-payments by providing accessible electronic channels to a wider range of users and to further enhance financial inclusion in Nigeria.” Surprisingly, however, mCASH is not as widely accepted as one would expect it to be, considering the advantages, by both merchants and buyers. Perhaps because Nigerians still do not trust digital payment channels for micropayments or because there is still something missing in the offering by mCASH.
Also, 9pay (powered by 9mobile) another micropayment initiative, allows users to pay for digital services online, pay utility bills, send and receive money, and collect change digitally. Relatively new, its acceptance can hardly be correctly gauged yet.
Paga, a mobile payment platform that allows its users to send money, receive money, and make payments through their mobile devices is perhaps the most popular in Nigeria yet. It is a mobile wallet on which any user can conduct transactional activities using their mobile phone. While Paga is the closest we have to M-Pesa, Nigeria is still a long way from China in terms of digital micropayments and a cashless society.
Among other things, boosting the digital economy in Nigeria by supporting and encouraging internet-based transactions, boosting trust by improving security systems, and using mobile to improve existing micropayment channels are key ways to achieve a cashless society in Nigeria. It goes without saying that the key to a cashless society lies in leveraging mobile as we can see from China’s sophisticated WeChat to Kenya’s M-Pesa and Nigeria’s Paga they all make use of the mobile.
A smart combination of mobile applications (iOS and Android), web applications, USSD, IVR, SMS can be the omnichannel approach that will conclusively usher in digital Micropayments in Nigeria. At HollaTags, our expertise covers the development of messaging portals and APIs for communication on mobile via VOICE, SMS, USSD and Mobile Value Added Services. If you have the idea or model to deliver Nigeria’s digital micropayments solution, then we are your partners in success. Let us discuss.