Many in the payments industry have been predicting so for years. That digital payments are inevitable for the future. It's only a matter of time, the experts said over and over again.
However, while the technology has continued to take over commerce worldwide, digital payments in Africa have not neared anywhere close to global adoption rates.
The challenges with developing the digital payment sector in Africa are well cataloged. Challenging infrastructure, low-income levels, and the well-established virtues of cash – immediacy, ubiquity, and trust – have all constrained the development of electronic payments in African countries.
Digital payments in Nigeria
In Nigeria, cash has remained king and financial services have remained stagnant despite decades of efforts to do away with old-fashioned paper money.
That was until the COVID-19 pandemic hit.
In the aftermath of the virus outbreak, we have seen digital banking emerge across Nigeria with heightening consumer demand for efficient ways to access banking records and complete financial transactions outside physical branches and traditional card payments.
The fear of paper currency as a carrier for the coronavirus has jolted the banking sector into massive digital disruption, signaling a powerful inflection point for payments in Africa. We see this as just the start of the shift in how consumers, merchants, and issuers choose to transact.
Online deposit, mobile banking apps, cards, and e-bills payment have become the norm overnight, with card and virtual card payments becoming one of the most important non-cash transaction channels.
With the power to oust physical currency, the potential of plastic as a medium of exchange is unrivaled. Banks that build their issuance business now not only contribute to the foundation on which this transition can take place, but also position themselves to reap the rewards of this seismic fundamental shift.
Increased demand for digital payments
As banks work to respond to the increased demand for digital payments induced by the COVID-19 pandemic, banks needed to tap into the considerable advantages held by our African markets including our youth demographic.
While the rest of the world is aging, the median age of the population in Africa is 19, compared to Europe at 42, for example. The young people of Africa have been increasingly engaging with financial products in different ways, ready to trailblaze the use of modern payment services.
This proliferation of digital banking prompted Network International to gain a first-mover advantage and lead the transformation in Nigeria by partnering and providing issuance solutions to financial institutions to help them respond to the changing needs of their customers.
Additionally, in the current economic climate, banks in Nigeria have been able to tap into our experience and expertise in creating virtual card solutions (VC) for emerging markets. Issuers also benefit from Network's advanced digital infrastructure and robust security protocols, avoiding the need to invest in expensive card management infrastructure.
Agile innovation in Nigeria's banking sector
As we power digital transactions with the capability to issue virtual cards through API Integration connected to existing channels of financial institutions such as mobile, Internet banking, and ATMs, we believe the potential exists for banks to multiply returns from virtual card Issuance. Banks that incorporate virtual payment cards into their business strategy also gain greater opportunities to cross-sell other products and services.
"The young people of Africa have been increasingly engaging with financial products in different ways, ready to trailblaze the use of modern payment services." - Hany Fekry, Network International (Tweet this | Share this via WhatsApp)
Virtual card issuance has the potential to transform into a strategic, high-value generating asset for banks while allowing bank customers to enjoy the convenience, flexibility, safety, and security of cashless payments to fulfill their financial and lifestyle needs.
We remain committed to fostering agile innovation by deploying our best-in-class technology to support the digital and financial inclusion of Nigerian consumers and businesses. Because, ultimately, furthering digital adoption is going to be dependent on the people, platform, and partnership.
Cash may not be gone just yet. But with this fundamental change accelerated by Covid-19, our payments ecosystem has now truly been ordained and will have profound implications for people, businesses, and society.
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