From
Africa to Germany, the majority of transactions are done in cash. Ninety-four
percent of retail transactions in Africa are still conducted in hard currency
and nearly 80 percent of all transactions in Germany are also carried out in
cash. Uber launched with 100 percent digital payments in the United States, but
had to change its strategy in India, where Hyderabad drivers were the first to
accept cash. As the company expanded to Kenya and Nigeria, they added a cash
option but went even further by accepting “digital cash”, or payments made
outside the app using mobile money. To scale in markets with low digital
payment penetration, they had to mix online and offline transactions to offer
consumers an option they were used to—cash payments.
Ultimately,
what drives how people to choose to pay for everyday purchases is not defined
not by one thing—like what form it takes, or who accepts it—but by how well it
succeeds in bringing together two very basic human needs: faith and
flexibility.
Africa’s
reputation as a leader in the adoption of financial technology is not because
the region pioneered a new technology. Mobile-money operators have succeeded
because they have blended technology into an existing culture and ecosystem
that was “offline” and engendered trust of consumers.
Mobile
money operators leverage small retailers called agents, who offer cash-in and
cash-out services to consumers. In some countries, operators allow the agents
to perform transactions on behalf of the consumer. While these services are
technology-based, cash is still at their core: customer pay agents in cash and
funds are transferred to other users, who withdraw the cash from another agent.
Today,
mobile money is a strong competitor to cash transactions in Kenya. With more
than 35 million subscribers across multiple operators, nearly 50 percent of the
country’s GDP passes through these networks. By introducing local retailers,
who consumers trust, into the digital payments ecosystem, mobile-money operations
across the region have witnessed strong growth. Trust is established because of
the face-to-face engagement, which currently outweighs faith in machines.
Digital
payments are a convenient way to quickly send and receive money, and create
transaction histories that demonstrate eligibility for credit. But to
transition to a fully digital payments world, we need to leverage human
interaction to build faith in the system in emerging and developed markets
alike. BNP Paribas, one of France’s largest banks, recently acquired
Compte-Nickel, a fintech start-up. Compte-Nickel’s innovation was simple—bring
banking and digital payments to communities through the neighbourhood
newsstand. Consumers visit the newsstand, open a bank account, and receive a
debit card in less than five minutes. At the time of acquisition, Compte-Nickel
had 2,500 agents, which made it the largest network for financial services in
France. The success of Compete-Nickel is based on leveraging a trusted
agent—similar to the mobile-money networks pioneered across Africa.
Fully
digital services like Venmo, America’s largest P2P money transfer network, are
also learning that the convenience of digital services cannot escape customer’s
faith that comes from human interaction. When the company launched, it had just
a dozen representatives shooting off emails. After a chorus of complaints, the
service not only now offers a 24/7 phone number to call, but employs over 130
full-time employees to manage the 4,000-5,000 time-sensitive inquiries it
receives every day. Venmo’s shift is a sign that complete automation won’t be
achieved soon. Even as innovative mobile platforms become popular, human
connections play an integral role in ensuring that users trust the service.
The
digital payments technology landscape is evolving at a rapid pace, but adoption
has not yet caught up. For cash to stop being king, we need to embrace methods
that build consumer faith in digital systems. Trust and currency go hand in
hand. Rather than resist cash, it’s time to work with the grain of society by
embracing a human touch, and a mix of cash and digital, to eventually drive a
cashless society.
Tayo
Oviosu is the founder and CEO of Paga, Nigeria’s leading mobile payment
service. He tweets at @oviosu
Source: www.newsweek.com
No comments: