Visa (NYSE: V), a global leader in payments, today announced the launch of a new report, ‘Value of Acceptance: Understanding the Digital Payment Landscape in Nigeria,’ which highlights substantial growth potential for digital payments, particularly among small and medium-sized enterprises (SMEs).
In Nigeria, digital payments are proving beneficial for surveyed SMEs, with nearly 90% believing that it boosts revenue and customer footfall. This growing confidence in digital transactions, especially cards, is coupled with a desire for further digitization, with 76% of cash-only SMEs planning to invest in new payment technologies.
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The study also reveals that more than half of merchants already prefer digital payments, with 44% reporting lost sales due to customers’ lack of cash and 62% expressing concerns over fraud risk associated with cash.
Nigeria’s Digital Payments Momentum
An overwhelmingly positive outlook on digital payment investment emerged in the report, with 83% of merchants surveyed seeing this as a crucial component for growth, boosting sales, reducing fraud, and enhancing convenience among customers,
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“Nigeria’s digital payments landscape is rapidly evolving, with a growing inclination towards digital transactions,” stated Andrew Uaboi, Vice President & Head, Visa West Africa.
“This transformation not only holds the promise of bolstering SMEs prosperity but can also help the economy to thrive. At Visa, we look forward to working together with our partners to further drive this transformation, enabling individuals, merchants, and businesses to grow and participate in the digital economy,” he added.
Addressing Challenges to Unlock Full Potential
Unlocking digital payments’ full potential in Nigeria will require confronting key challenges. There is an overarching need to enhance financial literacy and raise awareness about the benefits of digital payments while also incentivizing their usage among customers.
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With 76% of cash-only SMEs surveyed intending to get a point-of-sale (POS) device in the near future, an opportunity emerges to accelerate adoption through simplifying onboarding.
In addition, improving infrastructure to counteract concerns around payments failures (42%) can enhance confidence in digitization. To address fraud concerns, educational campaigns are vital to highlighting the robust security features of digital payments, especially the lower fraud risk associated with card payments.
Visa’s established cybersecurity capabilities can be instrumental to building trust across the digital payments landscape in Nigeria by helping to harness confidence across both the SME and consumer segments.
The Broader Value of Digital Payment Acceptance
Digital payments are crucial for Nigerian SMEs for a number of reasons including – boosting revenue through an increasingly cashless customer base, improving customer satisfaction with faster payments, and reducing operational risks by minimizing cash handling. Digital transaction records also provide valuable data that facilitate access to financing and stimulate growth.
While cash is still seen as quick and convenient, cards offer an advantage across expense tracking, spending encouragement, and enhanced security. Meanwhile, mobile and digital wallets offer an innovative and competitive edge. Promoting the adoption of preferred methods, particularly card payments, is crucial for driving growth.
Beyond direct benefits, digital payment adoption drives economic growth and financial inclusion, by connecting the unbanked to the formal financial system and enabling access to savings, credit, and insurance. Research shows that the transition to the digital economy can generate 1-2% annual GDP growth; a mere 1% increase in card usage generates an average $67 billion annual increase in goods and services consumption across 70 countries and territories.
Visa: A Partner in Driving Digital Payment Adoption
Visa is uniquely positioned to support Nigeria’s transition to a more digital economy. As a trusted advisor and partner, Visa offers a range of capabilities to help governments, financial institutions, businesses, and technology providers enhance their digital payment acceptance maturity.
Visa’s suite of solutions includes programs for specific merchant segments, innovations like Tap to Phone, Contactless Payments and Click to Pay, and resources educating businesses about the benefits of digital payments.
About the Visa Value of Acceptance report
Visa’s ‘Value of Acceptance: Understanding the Digital Payment Landscape in Nigeria’ report, conducted by 4Sight Research & Analytics, examines the current state of digital payment acceptance, exploring both opportunities and challenges. The findings are based on face-to-face interviews with 250 SME owners/managers who are key decision-makers with respect to day-to-day business decisions.
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