Contactless payments: What buying and selling would look like post COVID-19

Thanks to the global pandemic, a lot has changed about consumer buying behaviours. And these changes are more than just customers’ choices of goods and services. Current data trends show a major shift in preferred modes of payments, and this is re-modifying the business landscape.

Bola Asiru, a Principal/Divisional Lead at MasterCard Advisors (Sub-Saharan Africa) said this shift stems from “the hygiene concerns about cash” and has seen a corresponding rise in e-commerce transactions and even a growing dependence on internet connectivity for both work and lifestyle needs.

This can be seen reflected in the fact that some of the companies posting profits in this pandemic are telecommunication companies, e-commerce platforms or alternate payment solutions providers.

Speaking during the American Business Council Economic Update in partnership with MasterCard, Asiru noted that the changes in payment patterns also stems from a rising consciousness that limiting contacts with cash will not be sufficient if payment cards still have to be handled by different parties before payment is made.

In the bid to limit contact, “businesses need to adapt their strategic plans in order to add value to evolving consumer needs,” Asiru noted in his presentation during the virtual conference.

Why contactless payments?

If contact with cash is not considered safe, then contact with payment cards and other technologies may also not be safe.

The use of POS machines and ATMs in Nigeria currently requires an individual to provide the card for the cashier to swipe, or inserting one’s card into the machine to retrieve cash. After this, the buyer still replaces the card in his wallet.

Contactless payment solution seeks a dispensation where contact is totally avoided. This means a secure payment method using a debit or credit card, smartcard, or another payment device by using RFID technology or near-field communication, so that the customer can effect payment without the card having any direct contact with the machine with his hand or card.

It could also take the form of scanning barcodes to effect payment without any contact. There is no doubt that consumers want to stay safe and this can be seen in the increased usage of e-commerce platforms for convenience and safety.

As businesses seek to protect staff and customers by way of physical distancing, contactless payments will soon become the way to go.

Fear of frauds

A major hindrance to the “cashless society” picture being put forward by the apex bank is the fear of digital frauds.

Not a few people have lost some money after entering their payment card details into the wrong sites, and this consciousness continues to keep them in the cash era.

Answering questions on this, Asiru noted that despite the fears, frauds resulting from contactless payments are much lower than is seen in other forms of payments.

He however added that web developers will have to do more to prevent fraud and drive security on their platforms, especially as traffic is expected to push upwards.

Is Africa ready for contactless solutions?

Among other things, contactless solutions will depend largely on assured security of the space and reliable internet connectivity.

On this note, Asiru posited that East and North Africa will lead the revolution in contactless payments, while other countries will follow closely behind.

Contactless technology has proven to be an asset in a world where consumers must limit contact with cash” and consumers are already itching for this solution.

For instance, POS transaction volume and value have reached a 4 year high with N416 billion worth of transactions in July, while Mobile Transactions value also reached a 4-year high at N275billion of transactions. There has also been an increased use of Digital & Mobile platforms, as can be seen in the GDP report where the Telecoms sector posted an impressive growth.

“Our partners in Nigeria are already issuing contactless enabled cards and we are working with our stakeholders to ensure an increase in transaction limits and a deeper penetration of contactless for health and convenience of cardholders and merchants,” Asiru stated.

Policy framework and strategy

Although contactless cards and payments are already in circulation in several countries, industry stakeholders in Nigeria are yet to define standard transaction limits to be done without pin (Cardholder Verification Method).

Without a standard alignment across the industry, Nigerians cannot get the full benefit of contactless technology, and it falls on the Central Bank of Nigeria to issue a Cardholder Verification Method (CVM) policy on contactless payments, in line with global standards

Businesses will also need to revalidate their business strategies, with flexible and tactical action plans that will change alongside an unpredictable customer base.

They would also need to invest in Predictive Analytics “to model future trends and also as a hedge against unpredictable times” and also drive up cybersecurity on their platforms.

What you should know

American Business Council is an affiliate of the US Chamber of Commerce in Nigeria, and is considered the voice of over 50 American Businesses in Nigeria, working with US missions and othe partners to drive trade and investment opportunities.

The body is an advocacy instrument to promote development of commerce and investments between the United States of America and the Federal Republic of Nigeria, and holds regular talks and conferences to proffer solutions to foster socio-economic growth.

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