Long way to go people….I am dropping it from 98% to 96%, modelling a 2% improvement over two years. Will like to know if you have alternative insights on this for Nigeria. There is nothing new anywhere, including in the World Cash Report.
If you clicked the Paystack post, the secondary source for that $301B is here .
That would take you to the primary source, Mastercard.com, where it notes “According to research done by The Fletcher School and Mastercard Center for Inclusive Growth, of the $301 billion of funds flows from consumers to businesses in Nigeria, 98 percent is still based on cash.”
If you have a problem with the $301b, refer to Mastercard and Fletcher School for explanation. Both are very credible for me to quote them. I know many do not believe we are still 98% offline as at Feb 2018. Perhaps, the $301B is big: I doubt that if you check Nigeria’s GDP which partly tracks that.
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We have a very long way to go but this would involve long term strategic thinking.
For Nigeria to go near-cashless, fintech companies must:
1) Create innovative ways for payments. Nigerians love innovations and that is why western ideas thrive very well in this nation. Yes, there is web, app and POS payment but there must be something more, something out-of-the-box, that can go easily viral within a short time. WhatsApp is innovative and never spent a dime on marketing.
2) Employ very low cost charges per transaction. You don’t expect someone to pay #100 charge fee for an online transaction in a store when he can cheaply withdraw from the ATM across the street and pay without those charges. Let’s be reasonable. Most would not do that. Alipay and tenpay of china never offered a charge for about 10 years until they created enough value for their customers. We, on the other hand, are interested in short term profit as against long term market share. Many established fintechs are closely connected and powering the bank infrastructure but there are far more transactions that take place in stores than in banks. Just imagine, $295 billion transaction are cash based. If a fintech in Nigeria captures 25% of that amount, the fintech would easily become a unicorn. But we are looking at the #100 charge rate. What I expect is for the fintech companies to create vertical or horizontal business models that are powered by their infrastructure, generate other means of revenue from them, rather than sticking on #100 charge rate, OR enact a monthly fee, irrespective of the number of transactions (which I know they would not do)
3) improve on security and prevent network downtimes.
I believe that if a fintech company have an idea that is not bank/ATM based, the sky would be their starting point. This would solve the issue of security concerns, which is the main reason for the lack of patronage for online payments.
Thanks for this detailed perspective on this.