Ramblings on Payments

I hate queues. Especially when they are unnecessary.

I hate anything that causes extra stress, or stress in general.

Thus; I hate the long lines at the ATM’s to withdraw cash. I go the extra mile to avoid it.

Withdrawing on Sunday mornings, or late at night, or going long distances to get a “less busy” ATM.

The rise of the internet has given humans the capacity to trade without cash.

Cash is powerful in Nigeria. I can’t live my life without cash, buying food at the local canteen, paying for public transport, buying groceries from the neighbourhood. Very few services/goods in Ibadan (and Nigeria generally) accept cashless transactions.

I think a cashless life would be easy. Paying for goods/services via my phone would be GOLD.

I can’t remember the last time I loaded a recharge card on my phone physically. SMS services and shortcodes are the rage. Even banking apps and Zoto are slowly taking over.

The future is looking bright. The question is “For whom?”

The introduction of the nationwide cashless policy, which enforces a percentage deduction on cash deposits to banks above certain limits (e.g. N500,000) has raised various arguments for and against a cashless society.

The cash versus cashless argument is a very broad one.

On the one hand, policies like the above seem very unfair, especially as a large population of Nigerians lack the basic infrastructure to enable seamless cashless transactions (think constant electricity, fast internet, or even computers as the case may be.)

On the other hand, I can’t see a future with cash being the dominant way of transacting. With each day that passes by, more mobile phones are being purchased, more people are using the internet, and users want things done easily and stress-free (there are lots of people like me; I’m human afterall).

Anything that saves people time and money is really worth looking at, and a cashless society saves us both (especially time).

I have to say, that of all sides to this issue, the banks benefit a whole lot.

The previous banking model of an individual storing money in the bank, and the bank re-invests that money at profit is being remodeled at an alarming pace. Banks are increasingly becoming services. I pay sms alert charges, I recharge airtime from my bank account, I pay annual maintenance fee, blah blah blah, the list is long.

Banks are making a lot of money from these small debits (think small margins times large volume of accounts = large profits)

I’ll love to own a bank right now :)

The payments space is hot right now. Startups like Paystack processed over a billion naira in transactions in just their first year. There are several companies in the payments space; notably Paga, Quickteller (the Don), Kudi, Flutterwave, Cashenvoy etc

There are many more than I can mention, but there’s a huge market, a huge problem, and a huge opportunity.

I believe a cashless society is a no-brainer, Nigeria will get there eventually. Who/What will take us there?

Time will tell.