Let’s face it. Electronic payment; in an ideal world, makes cost of transactions lower. It reduces numerous threat parameters due to fraud and also allows transaction audit and reconciliation quicker. So why do people still use cash a lot in many parts of Nigeria?
Why are there large queues in the bank for cash deposits and withdrawals? Would you have the guts to take your child to the hospital by 2am with only an ATM card, believing that you can make any emergency payments electronically in Nigeria? Most parents and guardians would go for a hybrid: both cash and ATM card, just in case. This article is about that “just in case”.
Just in case what? Just in case should not be analysed lightly. It represents backup; redundancy and doubt. It is a mixture of all the things that could go wrong with an electronic payment transaction in Nigeria. The reasons for this doubt abound. It could be that the POS device is not working. Not working could mean device fault, poor or no network. Same news for the ATM device. Infact; Nigerians that use ATM cards a lot, have special ATM’s. Like the Transcorp Hilton ATM in Abuja. It is known to disburse mint with a high reliability rate; so people know specific ATM devices and if they want cash, they had better travel to that spot; and queue to retrieve cash.
Do not get me wrong, the story is not always bleak; most times the electronic payment channels and cash withdrawal channels like the POS and ATM respectively give you service. Although, we often forget to applaud the myriad of engineers and service providers that make this a reality for us. The problem is when they collapse; then options quickly diminish before our very eyes.
This is the reality why the “Just in case” exists. It is there because we have on some rainy day after battling the deep traffic of Lagos, arrived at that restaurant of choice and to our dismay realized that their menu have changed for the better and with it, the price. So the card we came out with cannot fund the choice of meal; or the POS in the restaurant is not working or we forgot our card and going back home is not a valid option, or the nearby ATM is acting up. This is like a dejavu to many, “I have been there once”, many would say. The experience is unspoken, but very real.
I would not like to talk about those that have given up on e-payment; and carry cash everywhere. Their stories are insightful. The POS debited them twice for just a bill. Such a mistake would even annoy a grounded millionaire. Not because he cannot lose that amount of cash but how it was lost. “Oh! It’s not lost; just go and complain to your bank and they would reverse it. Why? You gave me the ATM card to avoid unwanted trips to the banking hall and now for using it, you are sending me right back there?!”
Alright. What of those that have given up due to fraudulent debits? Well, they are advised to put a limit on their ATM account. Eventually, such an attack would only steal N50,000 max.
Trust, the word trust is important in financial transactions. Some no longer trust the ATM and POS. Others still do. Each man and woman through the eyes of his or her experience merit his or her convictions. Extreme paranoia exists; those that believe that if they do not possess an ATM card; they are worthless to kidnappers. Yes! You got it right; kidnappers. When they strike, they hold you at ransom and withdraw with your ATM card and your PIN. Give them the wrong pin, you suffer. Give them the right pin, your account is cleared. Well, maybe if you do not carry an ATM card, only cash; then they steal the cash and let you go. Another social reason why I should stick to cash.
What of Mama Bikeye in Lagos Island; your favourite vegetable merchant. She has a bank account but would not dream of keeping a POS because her transaction characteristics are sporadic; as seasonal as the vegetables she sells and with ever changing prices due to market forces. She cannot keep a fixed menu with prices under such circumstances; but she fits the stereotype of numerous SME’s that accept CASH only. Why? Because, that is the only way you can pay her. Unless you want a credit line for vegetables in Lagos Island. Which reasonable mother or wife or woman preparing soup would like that? Besides, the money is relatively small, just N2000. Mind you, I have to travel to Lagos Island and it may cost me time and money, about N1600 to buy N5000 soup items. Why can’t I do it another way? The sad news is that there is no other way for now.
This world of difficulty is not only for the payer, it is equally painful for the receiver. Think of the laundry man who drops off your clothes and he is compelled to wait for cash payment, since you do not do electronic banking for laundry. Come on!! That’s stretching it, pay my laundry man with my internet banking that requires a laptop, a working internet connection and a token device? Abegi… let him wait for the cash. After all, it is N13,500. The poor man waits for 3 hours to collect N13,500. Within that time; his productivity is as good as sitting in your living room watching snippets of the champions league goals until you return from the gym. In those 3 hours, he would have done a round trip to other customers; gotten back to base, and planned his work schedule. But no; what is the point, when he has to collect cash for work done? While cash increases the cost of doing business in Nigeria; it is often the only option in many scenarios.
I do not even want to get started with the huge cost entry barrier to merchants who want to accept e-payment. The charges; the devices; the training…. who needs all that with cash? So it is common to see merchants with seven POS devices; resting where the spiders (cobwebs) have pitched camp.
Enough of the potent reasons justifying the “just in case”. I do not want you to be dissuaded. After all, continuous improvement is important in all aspects of Life. So let us study why cash is so powerful. Maybe; just maybe; we would be able to copy why it is so powerful and transform these powers to the digital and electronic realm.
This is what I believe the ON POS app by Peergrid Ltd has done. Cash is universal. During a transaction, a payer gives it to a merchant and the merchant counts and delivers goods. Simple, straight forward and it works even for so called illiterate business men and women. It does not end there, Someone else can pay on your behalf and receive the money back from you. It does NOT require a hardware to transact with cash; except for the cash counting machine which is optional. It does NOT rely on network for successful transaction. And while you may short pay the merchant, it is odd to hear that the merchant debited your cash in the pocket twice because of network. These oddities do not apply in the world of cash. So cash remains King.
Can we create an electronic transaction that could behave as closely as cash? With Universality; transaction assurance; reduced errors in the transaction; fast and reliable?! I believe so. In fact, it is already here with us. ONPOS; a free app that can be downloaded from the Apple and play stores or even used directly from the website www.onpos.com.ng can do these to a large extent.
While it does not beat cash in speed of transaction; it makes everyday payment transactions possible for all. First, it removes the entry cost of receiving e-payment for merchants; so this is big. You do not have to pay an upfront of N250,000 because your e-commerce website needs to accept e-payment; nor do you need to buy a device that costs N60,000 so that people can insert plastics and pay you when there is network. No; you can use your phone, iPad or tablet. It is an electronic device; it has network and you already pay for it; so use it to receive cash.
ONPOS also allows someone somewhere else to pay for your transaction; this is powerful. Having walked into that LG shop desiring to buy the latest flat screen with an ONPOS bill generated for you, your darling at home could simply pay that while still watching that champions league finals. You simply transfer the bill and he/she pays from his or her phone.
This ability to allow people pay with convenience because you are able to transfer the transaction would transform e-payment in Nigeria forever. It helps you beat traffic; space and time. It comes at a charge; but this is because it cannot be free either. Cash is not free; most times people incur costs of N35,000 to make a cash payment of N10,000. Does this sound familiar or incredible? Just try applying for transcript in your Alma mater. If you do not book a flight, make a hotel reservation and go there, just to pay N 5,000, how else would you do that? So; do not complain too much about the e-payment charges; they are cheaper in most cases. The problem is that low adoption makes it an invalid option,more often than not.
What about receipts? Who keeps POS receipts that they have used since 2008? Only Mavericks. Most people discard right away. However, buried in those receipts, asides the cost of ink and trees cut down for paper, those receipts contain valuable information that in some cases could save lives; think of a pharmacy and the drugs you bought for your 1 year old.
ONPOS allows eternal receipt archiving. If you use it consistently; you would have an electronic trail of all your expenditures securely archived. This could even streamline annual audit for businesses.
So the e-payment solution that would work for Nigerians would work with the phone; would have zero barrier to entry for merchants; would be secure; would allow transaction transfer-ability and would be easy to use. ONPOS has all these and more. There is much left to be desired; before this solution can completely knock out cash; especially for Mama Bikeye and her small vegetable shop; but it is a huge stride in the right direction.
Let us keep evolving and improving this space. After all, in 10 to 15 years, like the experts in demographics have predicted; we would be the 3rd most populous country in the world.
A Nigerian solution; that works for Nigeria is what we need. ONPOS is positioning in the market for this. When we get there; we would know. What works, works; what does not, does not. ONPOS works; so e-payment would stand a chance to battle cash in the future.
By Osuagwu Ezeukwu (Executive Vice President, Peergrid Solutions ltd)
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