Uaboi: Virtual Cards Will Enhance Financial Inclusion

Country Manager, Visa Nigeria, Mr. Andrew Uaboi, speaks on technology innovation in the financial services space and how virtual cards and contactless payment solutions can further drive financial inclusion in Nigeria. Emma Okonji presents the excerpts:

How can virtual cards help the low income earners to save money, given the need to deepen financial inclusion at the lower strata of the country’s economic pyramid?

No one can save without access to digital financial tools. So what Visa is doing with virtual cards generally, is to enable access to digital payment system offered by Visa. With virtual card, money can be sent and received, and this creates opportunities for savings. The virtual cards also help merchants to access payments for every financial transaction. So the transfer of funds, which the Visa virtual cards enable, will also help people to develop saving culture and save money for future use. For merchants that accept virtual cards for payment, they automatically develop a store records of payment information, through which they can approach the bank to get loan.

How secured are virtual cards, given the security issues surrounding credit and debit cards, where some are cloned and used for unauthorised transactions to defraud the actual cards owners?

It is good this question of security of contactless solutions is raised in this interview because there is need to address the minds of people who still have phobia for online transactions and those who would rather want to transact with physical cash for the perceived fear of losing their money through virtual card transactions. I want to reassure those sets of people that the virtual and contactless payment solutions, are the safest and most easier ways of carrying out financial transactions, and they come with convenience. The Visa virtual cards come with additional security beyond what is obtained in a regular credit and debit cards. The Visa virtual cards are encrypted with high level technology, which makes it difficult to defraud. Since the cards can only be used to transact online, it has short expiration period from the very moment the card is generated online. It can be programmed for one time use and the owner can easily generate another virtual card anytime there is need to transact virtually. Virtual cards can be generated online for use for only three months period. At the end of its expiration period, no person can use that same card. Again, the contactless payment solutions are highly secured because each transaction is accompanied by a one time secure code, which makes it impossible for anyone that may have access to your code, to use same code to defraud the account owner. The virtual cards come embedded with electronic features that enable one to trace used credentials about the card. So Visa will continue to educate consumers on the proper use of their virtual cards in fighting against fraud. The virtual cards have in-built technology that protects sensitive information that could be used to defraud card holders.

Having evolved from the usual debit and credit cards to virtual cards, what exactly differentiates virtual cards from the other forms of cards, and how will you describe the ease of use of virtual cards and contactless payment solutions?

Essentially, contactless payment solutions and virtual cards look like the usual debit and credit cards, but the differentiating factor is the added security features that make its operations virtual, contactless and of course unique. With the virtual card, the cardholder is able to tap into electronic devices that allows virtual transactions. So what that does for the virtual card holder, is all about convenience and safety in transaction. From a merchant standpoint, it brings about easy and smooth flow of their customer traffic, which invariably facilitates commerce. It can make financial transactions a lot easier, thereby attending to huge volume of customers seamlessly and effortlessly. Contactless payment solutions take different forms, and over the next few years, we will begin to see how mobile apps will make financial transactions a lot easier with so much convenience.

Do you foresee any challenge for this revolution, especially in the current context of technology innovations?

With any new solutions, there would be some underlying issues that people need to understand before embracing, but even at that, consumer bahaviour is constantly changing with technology evolution. The increase in online shopping is making life easier for the majority of consumers. New technology, no doubt, will always attract people with fraudulent intentions to try such technology, to steal sensitive information. For us at Visa, we do not see it as a challenge because we rather see it as an opportunity to innovate the more. So it is our responsibility to create the right awareness for all users of our payment solutions. We will continue to educate them on the key things they should look at for when carrying out online and virtual transactions. We also have a duty to educate them about the danger of sharing sensitive information around online financial transactions. So it is not really a challenge as it were, but it is an opportunity to ensure that people are knowledgeable about the opportunities in the digital space.

One major fear about contactless payment solutions, is the inability of the network to complete online transactions at real time because of poor telecoms infrastructure on which the solution rides on. Most times recipients will either experience delay for hours, days and weeks, or may not even receive the transferred money even when the sender’s account has been debited. How can this be addressed?

Most times in happens that way, where there is delay in completing transactions, but that could be traced to network issues from the telecoms service providers, and not from the app or the contactless solutions. Although it is a challenge, but as technology advances, I am sure the telecoms service providers will be able to improve on their networks to address such challenges. Banks are beginning to address such challenge, in collaboration with the network service providers.

In the area of infrastructure, Africa, including Nigeria, has poor infrastructure development. Without access to basic infrastructure, it will be difficult to bridge the existing digital gap. Our mandate is to develop relevant solutions for financial transaction, and we hope that service providers and government will address the poor infrastructure challenges. We will continue to partner with government and service providers to ensure the provision of better infrastructure that will enhance seamless financial transactions.

Visa is currently driving virtual cards and contactless solutions to advance financial transactions in the Nigerian payment ecosystem. How ready is Nigeria to embrace the payment technology?

The payment landscape in Africa and Nigeria is evolving and the adoption rate is increasing because people want a faster and more convenient method of payment, especially in the era of COVID-19, where governments of different countries are serious with the observance of COVID-19 protocols, that have restricted physical contacts of people and objects. Few years ago, manual cards like debit and credit cards, dominated the payment space. But today, technology innovations are driving virtual cards and contactless payment solutions and the merchants and consumers are surrounded with varieties of payment options driven by mobile apps. At Visa, we are constantly innovating and we are using technology to make payments more convenient and safer for consumers and merchants. Technology in the payment space has evolved from stripe cards to chip and pin cards and today we have gone a step further to introduce virtual cards and contactless payment solutions. As for Nigeria, the records from recent surveys conducted by Visa, showed that 71 per cent of consumers are moving towards online payment, where virtual cards and contactless payment solutions, feature prominently. So Visa is making the online payment space a lot safer and convenient for people, and Nigerians are indeed ready to embrace the new payment solutions.

Before the era of COVID-19, the Nigerian economy was regarded as a predominant cash-based economy, because of the heavy dependence on cash for most financial transactions. How is Visa helping to boost financial inclusiveness in Nigeria?

As Visa, we made a commitment several years ago to provide innovative payment system that will help drive financial inclusion among Nigerians. The truth is that people are eager to carry out financial transactions in a more convenient and safer way, and Visa is providing the solutions that will help achieve the desire of people. The informal economy deals largely with cash and Visa is simplifying payment system in order to remove payment barriers, so that more people will adopt digital payment system. Going by some of the recent statistics released by the Nigeria Inter-Bank Settlement System (NIBSS), we can see growth in the acceptance of digital payment solutions in Nigeria. In fact, there is a double digit growth in the acceptance of digital payment solutions in Nigeria. What this means is that the predominant use of cash is gradually been eroded from Nigeria, as more people continue to accept digital payment, and as Visa continues to demystify the use of payment solutions and make them safer.

Among the several payment solutions developed by FinTech players in Nigeria, what in your view, will make the Visa contactless payment solutions unique from other forms of payment solutions?

The Visa’s virtual cards and contactless payment solutions are unique, because they can be operated without physical contact with the cards, and they are designed to protect all forms of financial transactions, while boosting sales for merchants. The virtual cards and contactless payment solutions became a necessity for Nigerians during the lock down, occasioned by COVID-19, because people were able to shop online, and make payments online, without going to a physical market or mall, and that in itself, changed the consumer shopping and spending behaviour. Virtual cards can be activated online and used for payment and virtual cards is also used to eliminate queues and traffic at toll gates since commuters do not need to give money and probably collect their balance before driving off. With contactless solutions, all the user needs do is to simply tap on the device and payment is effected and the person drives off without any form of delay.

How will you address the challenge of fast data depletion during online financial transactions, using the Visa virtual and contactless payment solutions?

Our virtual cards will be riding on existing infrastructure that will not necessarily lead to faster data consumption, while transacting online. Most payment devices used in malls today, have the contactless features but some have not been activated. So it is the same device that is used for the usual debit and credit cards, that will also be used for the virtual cards, and I do not see the virtual cards consuming more data than the usual debit and credit card. For the merchants that use Point of Sales (POS) terminals, the data consumption will definitely be the same in transmitting Information and validating payment with the originating banks. So the virtual cards and contactless payment solutions do not create additional burden for the merchants and consumers from the stand point of data consumption.

How is Visa collaborating with industry players and government in promoting the virtual card technology to enhance financial inclusion in Nigeria?

At Visa, we believe in collaboration because we are not a stand-alone entity. We appreciate the power of collaboration and we are constantly driving collaboration within the industry players and the government because we believe that collaboration is key to business growth and sustainability. We apply safeguarded measures in ensuring sustainable growth within the payment ecosystem. One of our strategies to drive digital transformation across Nigeria, is to collaborate with Financial Technology (fintech) players as well as government. At the end of it all, our goal is to deliver digital solutions that are fit for purpose and that meet the needs and desires of customers.

How will the Visa virtual cards and contactless payment solutions, help in driving financial inclusion across the country?

The truth is that there a huge number of people that are still financially excluded and our solutions are designed to bring these peoples onboard the financial services ecosystem and make them financially inclusive so that they can enjoy the benefits. At Visa, we made a commitment to bring 500 million people into the financial inclusion space and we really committed to meeting the goals. So the Visa virtual cards and contactless payment solutions are designed to drive financial inclusion in Nigeria and in other parts of the world, where we operate. We have connected hundreds and millions of people to the digital financial space and we are still connecting. As we connect businesses and people to the digital payment space, we are also empowering those that were initially excluded from the financial inclusion stand point, and giving them the opportunity to be financially inclusive.
In the wake of COVID-19, finTechs are taking even more impactful roles – as the champions of small businesses and recovery. A whole new generation of finTechs are helping solve complex problems and bringing financial services for consumers and small- and micro-businesses that are underserved. With 680 million people remaining unbanked, and 60 million untapped merchants in CEMEA, finTechs are part of an emerging community joining the rush to develop new services that will support these unserved segments.