A fresh window of opportunity may have come the way of Nigeria’s estimated 37 million Micro, Small and Medium Enterprises (MSMEs). Small businesses and startups willing to adopt online payment solutions stand to benefit from a projected N200 billion online payment revenue this year. Assistant Editor OKWY IROEGBU-CHIKEZIE writes on how MSMEs can leverage online payment solutions to grow their businesses and create jobs.
Small businesses and startups are acknowledged globally as the life blood of any economy. This is because of their immense capacity to grow the Gross Domestic Product (GDP) and also create jobs. But in Nigeria and, indeed, other developing economies across the world, one of the major challenges of MSMEs is how to receive payments from their customers through cash and bank payments.
Although, Nigeria, according to experts, boasts an estimated 37 million MSMEs, electronic payment remains relatively a new phenomenon. Most transactions in the country are done with cash, which remains the preferred medium for payment in the country. Factors such as poor awareness of e-payment solutions, ignorance, poor banking culture, lack of trust, illiteracy and the love for the status quo have been identified as being responsible for the high volume of cash transactions in Nigeria.
However, the situation is changing. This was in the wake of the adoption of the “cashless” initiative by the monetary authorities in Nigeria, for instance. In 2016 alone, about N132 billion worth of goods and services were said to have been purchased via the Internet. This, according to financial experts, made online payment a veritable market for MSMEs to tap into to grow their businesses.
The thinking is that MSMEs are perhaps, the most viable sector to drive growth as well as engage the highest number of employees in any economy. Their capacity to do so, according to experts, put them on a vantage position to turn around the fortunes of its operators as well as the country’s. Besides, viable MSMEs drive industrialisation. And this must have been why operators and stakeholders in the sector believe that the adoption of online payment solution remained the way to go for MSMEs.
Already, PayU Nigeria, an online payment platform, appears poised to push an aggressive uptake of online payment solutions by MSMEs. Based on the firm’s findings, MSMEs stand to benefit from a projected N200 billion revenue that may accrue to the sector from online payments in the current year.
PayU Nigeria Country Manager, Ms Juliet Nwanguma, also said that by adopting online payment systems, small business owners can enjoy the associated benefits of credibility and reliability, especially as it has proven to be more secure and credible than receiving cash or cheque payments.
Nwanguma added that it also has the advantage of instant receipt of money with no risk of bounced cheques and the fees associated with it. She explained that businesses that have online payment platforms are considered more reliable and this encourages customers to do business with them, while for the consumer, it offers fraud protection, thereby securing their money.
The online payment expert therefore, urged MSMEs in the country to leverage on online payment as it will open up their businesses to more customers far beyond their locality, considering that a large population of people now rely on and use the Internet to purchase goods and services.
Nwanguma stated that setting up online payment is also quick and easy, as some of the payment platforms offer affordable plans with zero set-up fees and low transaction rates. She also revealed that MSMEs can use online platform to drive their export capabilities.
At moment, the MSME sector is said to account for a paltry seven per cent of the country’s total export, a figure considered low when compared to the over 37 million MSMEs operators in Nigeria.
To increase the capacity of MSMEs to contribute more to the country’s total export, Nwanguma told The Nation that her firm offers easy and instant online payment solutions for small businesses.
Giving more insight to the available solutions, she said the PayU Easy product, for instance, is a quick, easy and hassle free way to start selling online. According to her, the solution is flexible and ideal for businesses without an online merchant account.
She explained that PayU Easy comes with the assurance of her firm’s global expertise across 16 markets where they offer over 250 payment options.
“PayU Easy is designed for businesses with less than 500 transactions weekly. It offers the advantage of minimum documentation, weekly settlement, security of transactions (PCI DSS SSL and 3D secure), and zero set-fee,” she said.
That is not all. Nwanguma also said it offers the benefit of customised payment web page designed to ensure a consistent look and feel. “With PayU Easy, businesses can accept all major payments including Visa, MasterCard and bank transfers.
“The online market offers huge potential to start-ups and the 37 million SMEs in Nigeria to grow their sales. PayU Easy was designed to help them tap into this potential,” Nwanguma explained.
Explaining how it works, the PayU Nigeria boss said: “Customers simply click a link on their website and are transferred to a secure payments page where we handle the entire process. When they’re finished, we deliver them back to your site. The payment goes into an account with us, and we pay all the money owed to you at an agreed interval.”
She assured that customers do not need to worry about card security; all they need to do is sign up and get selling. “Customers simply complete their purchase and you get confirmation that a transaction has taken place. The money from the sale goes into an account at PayU.
“Usually every week, we add up your total, subtract our fees, and pay the balance into your account. You also get a statement. The whole process is automated, making it easy and effortless for you,” she explained.
On the significance of PayU Nigeria to small businesses, Nwanguma stated that while MSMEs in Nigeria may have to wait for government’s intervention to address the various challenges confronting them including lack of access to low cost funds and poor infrastructure, they do not necessarily have to wait for such intervention to overcome the challenge of limited access to market.
She stated that with the fast and easy online payment products offered by PayU Nigeria, MSMEs have the immediate opportunity to sell to more people in and around Nigeria, reduce the cost and risk of accepting payments, and as a result boost revenue and their contributions to the nation’s GDP.
While noting that migrating business online might pose some challenges to some MSMEs regarding some accounting and inventory functions, she assured that her organisation has taken this into consideration and has taken it upon itself to automate online without the need for additional business intelligence tools.
For the Managing Director of Black & Empress, an upscale clothing line on Broad Street, Lagos, Mrs. Evelyn Egboka, the adoption of online payment methods by MSMEs has become imperative. She noted that online payments aid faster sales, expand and increase patronage opportunities.
“Customers can pay for goods and services from the comfort of their homes or wherever they are located. Currently, we accept payment easily and directly into our accounts, thus saving the time and resources for collecting and banking money collected via cash or cheque,” Egboka said.
The budding entrepreneur admitted that for many operators in her line of business, this has greatly reduced the vulnerability of MSMEs to risk of cash theft and associated vices.
Egboka, however, cautioned that the choice of the channel or online payment gateway a business decides on determines how cost effective it will be in the long run. She said she has watched her business grow beyond sending and receiving payments.
Also reacting to the issue of safety of online payment, an Information Technology (IT) Manager with Crystal Park Integrated Solutions, Mr. Stephen Oluwasegun, said that for any payment system to be able to replace cash or at least compete with it, it must win the trust of its users in the economy.
He said: “For this to happen there must be a way for merchants to verify the validity of the purchase. The payment solution must also be easily convertible to cash or as good as cash. Since most merchants in Nigeria are in business on subsistence basis, there must be a way to use the money they made for the day-to-buy what they need for the day or for the following day.”