Navigating Digital Payment Adoption by SMEs in Nigeria
In the evolving heart of Nigeria’s economic landscape, digital literacy has become a non-negotiable skill and critical driver for businesses seeking to scale operations across all sectors — it’s a strategic imperative.
This article explains my view on the impact of digital literacy, with a focus on the role of point of sale (POS) and mobile payments for small and medium enterprises (SMEs), corporate entities, and large enterprises. Additionally, we explore the significance of building robust merchant solutions to empower businesses in this digital evolution.
The Changing Dynamics: The Digital Landscape of Nigerian Fintech
Let’s take a quick dive into history here, if you don’t mind.
As internet and mobile penetration continue to rise, Nigeria, the economic powerhouse of Africa, is experiencing a digital revolution that is changing the way businesses operate with unprecedented opportunities to enhance their operations.
2010's—In a bid to revolutionize its financial landscape, Nigeria embarked on a transformative journey with the introduction of the Cashless Policy by the Central Bank of Nigeria (CBN). This initiative, launched in 2012, represents a strategic move towards a more technologically-driven and secure financial ecosystem.
With the introduction of the cashless policy, the adoption of digital payment alternatives like bank transfers and card payments on ATMs (automatic teller machines) grew rapidly in the Nigerian market.
2013—The Central Bank of Nigeria (CBN) introduced the PoS system and agent banking to achieve financial inclusion and develop a cashless economy.
2016—The cashless policy further brought into the limelight more financial technology (Fintech) unicorn products like Paystack (2016) and Flutterwave (2016), leveraging easy-to-integrate online payment solutions.
2020—The effects of reduced physical interactions post-COVID-19 further enhanced the need for businesses to transact without contact with physical cash, which in turn reduced regular traditional banking visits, with increased adoption of more digital payment products and POS agency banking.
It was clearly evident that the Post Covid-19 era practically birthed the need for more mobile payment solutions to facilitate transactions and business operations.
Case Study: Role of POS and Mobile Payments for Nigerian SMEs
For Context, POS (Point-of-sale) involves using mobile terminal devices to accept online payments and process card transactions. In most cases, these devices are customizable with NFC (Near Field Communication) which is a contactless payment feature that operates in similar manner as to Bluetooth or IOS Airdrop.
The adoption of POS and mobile payments represents a paradigm shift for SMEs in Nigeria. These technologies offer a lifeline for businesses that have historically operated on a cash-centric model. By embracing digital payments, SMEs can streamline transactions and enhance financial transparency.
Moreover, the positive impact extends beyond mere transactions. Digital literacy enables SMEs to harness data analytics, optimize inventory management, and implement targeted marketing strategies. The combination of these skills positions SMEs not only to survive but to thrive in the competitive business landscape.
Beyond SMEs, the adoption of digital literacy by corporate entities and large enterprises in Nigeria positions businesses to better navigate the complexities of an increasingly digital marketplace, ensuring they remain competitive and adaptable in the face of rapid technological advancements.
Call to Action: Building a User-Friendly Merchant Solution
This involves creating an integrated ecosystem that seamlessly incorporates POS and mobile payment systems, aligning them with other digital tools such as inventory management software, customer relationship management (CRM) systems, and e-commerce platforms.
At the heart of encouraging digital literacy for businesses in Nigeria lies the concept of building a robust merchant solution.
To further understand the view of business merchants navigating the digital ecosystem, it was important to ask some vital questions.
Building a merchant solution goes beyond the transactional aspect, encompassing the entire customer journey. It involves designing a user-friendly and accessible interface for both merchants and customers, ensuring a frictionless experience.
Moreover, robust merchant solutions should prioritize efficient sales collection and operations with security measures, safeguarding sensitive financial and personal information from potential threats.
I collaborated with a team of stakeholders and technical experts to build a unique solution. I designed the ClanePOS dashboard application with an integrated mobile softPOS solution across IOS and Android platforms, which was launched earlier this year (2023).
Challenges: Embracing Digital Payment Adoption
Despite the immense potential, challenges persist on the path to digital literacy and the widespread adoption of POS and mobile payments in Nigeria.
The transition to a cashless economy has been potentially posed with issues such as inadequate digital infrastructure, concerns about cybersecurity, and the need for increased financial literacy. Addressing these challenges is crucial to ensuring a smooth and successful implementation of the policy.
Understanding the nuances of online transactions, payment gateways, and cybersecurity is crucial to establishing a secure and efficient e-commerce presence.
The journey towards digital literacy is not without its challenges. SMEs and business owners may face resistance to change, resource constraints, or a lack of awareness about the benefits of digital transformation. However, the long-term advantages far outweigh the initial hurdles.
Conclusion: Digital literacy is key
It’s a no-brainer that investing in digital literacy pays dividends in the form of increased efficiency, expanded market reach, and improved competitiveness.
Government initiatives, industry partnerships, and educational programs play a vital role in supporting SMEs on their digital literacy journey.
In the same way, the role of POS and mobile payments cannot be overstated in their current groundbreaking capacity, and building a comprehensive merchant solution acts as a cornerstone in this changing process.
Digital literacy is not a luxury but a necessity for SMEs and business owners in the modern business landscape. As businesses of all sizes embrace digital literacy, the landscape of the Nigerian economy is poised for sustainable growth, resilience, and competitiveness in the digital age.
PS: This article is entirely my view, based on my own research and personal experiences. It doesn’t represent a general opinion. Thanks for reading this far, and I would also appreciate your views as well.🙂
