Card payments, as ubiquitous as they may appear, are actually not the preferred payment method in certain markets.
Take the case of Nigeria, for example. According to Lagos FinTech firm TeamApt, account transfers represented over 80% of all business transactions in August 2022, compared to a meager 18% for card payments.
This, according to Felix Ike, co-founder and CTO at TeamApt, has left brick-and-mortar retailers struggling to adequately meet the payment preferences of their customers due to the lack of adequate tools to process cardless transfers in a quick and seamless manner.
In fact, he said in-store account transfers initiated by a customer to an account provided by the merchant exposes the latter to many risks.
“It’s possible that the person who has access to the account may not even be [present and] the shop attendant might not have access to the account […] to confirm that the money has been received,” Ike told PYMNTS in an interview.
Aside from the inconvenience aspect, this process makes the merchant vulnerable to fraud attacks as they have no way of determining if the payment went through successfully. “Seeing a debit alert on your phone is not enough,” Ike noted.
These issues are what TeamApt’s new point of sale (POS) Transfer product is trying to solve today, by enabling local small and medium-sized enterprises (SMEs) to easily accept and confirm account-based payments with an instant alert on their POS terminal.
Moreover, because the firm rides on the interbank transfer framework within Nigeria, verifying and associating the identity of the customer behind the transfer with the cost of items purchased is no longer a challenge for merchants.
“Now a customer walks up to the business, does a transfer, [the merchant] receives an alert, [confirms and] accepts the transfer, and the POS prints a receipt and everybody’s happy,” Ike explained. “This completely eliminates fraud, it’s seamless [and] makes it very appealing to businesses.”
He added that the product creates more opportunities for small businesses to boost in-store traffic and cater to more customers who prefer account-based transfer payments, which in turn leads to an increase in the volume of transactions processed.
Home to leading FinTechs like Flutterwave, OPay and Interswitch, Nigeria is undoubtedly a far more technologically advanced nation when compared to other countries in the region.
Ike pointed to the Nigeria Central Switch and the interbank interoperability offered between various players in the financial system, for example, as proof of the progress made by the West African nation to eliminate payment pain points in the market.
However, he highlighted areas that could still use some technological advancement, adding that these areas are not necessarily due to lack of technological capability but more of a market readiness issue.
“When you go to other developed countries, people pay with their phones, you don’t need to have your card. But when you come to Nigeria, that [contactless payment option] is not available,” he said, adding that the probability of an existing merchant location in the country allowing customers to pay with NFC is next to zero.
Against that backdrop, Ike said market readiness, from both merchants and consumers, would be key in determining the kind of tech that is rolled out in the market moving forward.
The lack of NFC-enabled phones and cards are also contributing factors as to why the market is not yet ready to drive new waves of payments innovation, he noted.
That said, it’s important to be equipped and ready to tap into the opportunity once the required level of market readiness is achieved, Ike said.
“It’s not a difficult thing to build, and this speaks to any other kind of tech. It’s all about being very aware and conscious of the market posture. The moment you see an opportunity or a sense of readiness for a particular kind of product, you [simply] jump into it and build something that will solve problems for your businesses.”