Goott: Contactless Payments Will Enhance Financial Accessibility

The Director for Africa and India at Unlimit, Trevor Goott, speaks on the need for further adoption of contactless payment in Nigeria and its many benefits in driving financial inclusion and creating easy access to finance. Emma Okonji presents the excerpts:  

Since the introduction of contactless payments in Nigeria, what has been the current adoption level and how has it impacted the financial inclusion drive of the country?

I believe the introduction of contactless payments in Nigeria has triggered a significant surge in adoption rates while profoundly influencing the nation’s pursuit of financial inclusion. This technological leap has not only revolutionized payment methods but has also acted as a catalyst for enhancing financial accessibility and participation. The escalating adoption can be attributed to factors such as heightened awareness, rapid urbanization, and increased smartphone usage.

Also, the introduction of contactless payments in Nigeria has facilitated broader financial accessibility, particularly in remote and underserved regions where traditional banking services are usually limited. This has consequently empowered individuals who previously faced geographical barriers to actively engage in the formal financial ecosystem. One can also assert that the shift towards contactless payments has driven down transaction costs, benefiting both consumers and businesses. This affordability has incentivized greater usage of digital financial services, especially among individuals from lower-income strata. Lastly, contactless payments have the potential to contribute to the creation of financial histories – and therefore credit scores – for previously unbanked individuals. This will for the first time enable financial institutions to gauge creditworthiness and extend tailored financial solutions to these previously unbanked individuals.

What are some of the unique challenges affecting the adoption of contactless payments in Nigeria, and how can payment solutions companies address such challenges to enhance growth?

Despite the many benefits of contactless payments in Nigeria, the adoption indeed comes with its set of unique challenges. One significant challenge is the prevalence of a cash-based economy deeply ingrained in Nigerian culture. To address

this, payment solutions companies can embark on comprehensive educational campaigns. This can be achieved through strategic partnerships with local communities, financial institutions, and governmental bodies, through which companies can raise awareness about the convenience, security, and benefits ofcontactless payments. This educational effort can help dispel myths, build trust, and encourage a gradual shift toward digital transactions.

Nigeria’s diverse technological landscape also poses infrastructure challenges, especially in rural areas with limited internet connectivity and access to Near Field Communication (NFC)-enabled devices. In this regard, payment solutions companies can collaborate with all telecommunications providers to improve network coverage and promote the distribution of affordable NFC-enabled devices. Such collaborations would ensure that contactless payment options are accessible across urban and remote areas, fostering inclusivity and accelerating adoption.

How can financial institutions leverage contactless payments to deepen financial inclusion across Nigeria?

According to a 2021 study conducted by the Central Bank of Nigeria, Financial inclusion has assumed a great level of importance in Nigeria due to its perceived relevance as a catalyst for economic stability. As such, leveraging contactless payments to enhance financial inclusion across the country presents an exciting opportunity for both individuals and the economy as a whole. This approach would entail tackling the distinctive hurdles that have traditionally impeded the broad accessibility of financial services.

To achieve this, financial education is at the top of the list. Financial institutions can and should continue to initiate comprehensive awareness campaigns to educate the population about the benefits and convenience of contactless payments. These campaigns should focus on reaching both urban and rural communities, emphasizing the simplicity and security of using contactless methods. Adopting local languages was necessary to ensure proper communication, especially in the rural areas would also be key in establishing the relevant rapport and credibility needed to communicate this.

In all, the solution should be simple and convenient – Contactless payment methods simplify the account setup process, enabling unbanked individuals to swiftly enter the formal financial ecosystem. This frictionless approach ensures that the barriers to entry are significantly lowered. Financial institutions can bring millions of Nigerians into the formal financial fold by strategically implementing some of these approaches, ensuring that more people benefit fromthe digital economy, and accelerating contributing to financial growth and empowerment of the target groups.

One of the goals of financial inclusion is to create multiple channels of payment that are easy to deploy and accessible to all customers. How has contactless payment helped in achieving this goal?

Absolutely, the pursuit of financial inclusion is centered on accessibility and ease of use. Contactless payments have been instrumental in advancing this objective by creating multiple accessible payment channels.

In Nigeria for example, contactless payments are known to offer a streamlined and user-friendly experience. This is because, by enabling transactions with a simple tap or wave, they eliminate the need for physical cash or complex processes. Naturally, this has bolstered the functionality of numerous industries including e-commerce, and other digital businesses that require simplified and contactless payment gateways to thrive within the country. This convenience has also made it possible for a wide spectrum of customers, including those in remote areas or with limited financial literacy, to participate in digital transactions.

Moreover, contactless payments have extended the reach of financial services. Through mobile devices and digital wallets, people can conduct transactions without the typical constraints of time and location. This unique feature of inclusivity and accessibility empowers individuals who may lack proximity to traditional banking infrastructure. As such, contactless payments have truly democratized financial access by bridging the gap between technology and everyday transactions, therefore, contributing significantly to achieving the goal of comprehensive financial inclusion.

Aside from contactless payments, what other payment options are available that meet consumer preferences in the financial sector?

Contactless payments can be in the form of a QR code linked to a bank account or debit card or credit card or even something like Apple Pay or Google Pay. So, if we talk about other payment options that meet consumer preferences other than contactless payments, then USSDis still an option. It is simple and works on feature phones not equipped with NFC to allow for the contactless payments. However, in time, as most feature phones evolve, and start to offer NFC as a part of the device, there would be a move towards the use of contactless payments.

Building the right level of trust is a key growth factor for the financial sector. How has Unlimit been able to build customers’ trust over the years?

As I mentioned earlier, cultivating trust is paramount for businesses operating in the financial sector. At Unlimit, we’ve consistently prioritized trust as a cornerstone of our operations. In particular, the trust is centered on ensuring the safety and security of the payment process. In simpler terms, customers using Unlimit for payments want to be certain that their personal information won’t be at risk and that their money will remain secure.

Unlimit signs up to and operates under the strictest global security protocols, and holds PCI-DSS certificates where we operate, ensuring that our customers operate in the safest and most secure environment possible.

Further, on the question of cultivating customer trust – remember that the customer has the free choice to leave us for another payment company. If we were failing in this area, then we would experience a rapid loss of customers. However, we are only seeing year-on-year customer growth therefore the trust in the security of the operations of Unlimit is validated by this.

Given your global experience in managing Unlimit business in Africa and India, how will you describe the impact of emerging technologies on the Nigerian financial sector?

Drawing from my extensive experience in establishing and managing Unlimit’s business operations in both Africa and India, I can attest to the profound impact that emerging technologies have had on the Nigerian financial sector. These technologies have ushered in a transformative era, redefining the landscape and driving significant changes across various dimensions. The technologies were actually given a boost during the recent COVID 19 pandemic.

One notable impact has been the democratization of financial services. Emerging technologies, such as mobile banking and digital wallets, have enabled unprecedented access to financial resources for previously underserved populations. This shift has both expanded financial inclusion and contributed to reducing the overall disparity between urban and rural areas. Through accessible and user-friendly interfaces, Nigerians can now conduct a range of financial transactions, from basic banking to more complex activities, from the device in their hand.

The Nigerian financial sector has also witnessed a significant shift in payment methods. The advent of contactless payments and mobile money has streamlined transactions and encouraged the adoption of formal financial channels. This transition away from cash-based transactions has the potential to enhance transparency, reduce fraud, and contribute to the government’s efforts to modernize its financial infrastructure.

Do you foresee any issues with the regulatory framework governing contactless payments in Nigeria, and what in your view should be the best approach to technology regulation in the financial sector?

Regulatory frameworks are integral to the measured success and credibility of all industries, including the payments solutions ecosystem. It sets the rules of engagement for how business can operate. However, while these are essential, they can sometimes pose challenges for emerging technologies like contactless payments. To

mitigate this in Nigeria, it is crucial for regulations to keep pace with technological advancements while ensuring safety and fairness.

In all, the best approach is a balanced one. Regulations should encourage innovation and competition, but also protect users and maintain financial stability. To achieve this balanced approach, the need for healthy competition between organizations, as well as collaboration between government, industry, and experts cannot be overstated as they help in creating systems that are beneficial to all industry players.

It’s like driving a car – rules keep us safe, but they shouldn’t stop us from reaching our destination. Similarly, regulations should guide technology, not stifle it, therefore fostering a healthy financial environment for all.