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According to data from Nigeria Inter-Bank Settlement System (NIBSS), Mobile payments grew astronomically in the year 2020. Asides a 391% increase between May 2019 and April 2020, NIBBSS also recorded that Nigerian merchants and mobile money operators processed over 655 million points of sale (POS) transactions valued at ₦4.7 trillion ($13 billion) in 2020. This presents a 50% increase from the previous year, 2019. Similarly, Statista reports that as of December 2020, about 10 percent of digital payments in Nigeria were transacted through e-wallets. This monumental surge represents a huge win for digital payments adoption in Nigeria.

This kind of numbers in a predominantly cash-based economy calls for scaling opportunities, Financial Institutions towing the digital payments route ought to capitalize on these insights to explore and push for more digital payments options for their customers.

The adoption amongst customers is growing and, in an economy dominated by a youthful population, increasing smartphone penetration, and a focused regulatory drive to increase financial inclusion and cashless payments, the perfect recipe for a thriving digital payments sector is near ripe for harvest.

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It cannot be denied that COVID-19 presented the greatest challenge for cash transactions. The industry has never seen such a drastic change in payment options with the replacement of cash payments with digital alternatives. Mobile and contactless payments were the protagonists of 2020, offering solutions that go beyond the hygiene issue linked to the use of cash. The adoption of new means of payment allowed people and businesses around the world to access the digital economy. But Nigeria is only at the beginning of what will be the reinvention of payment experiences.

As a Business, Digitizing payments has never made more sense than now. Besides its numerous advantages, it also means less hands-on tracking and management of ledgers. Payments are received instantaneously and processed via a PSP, then automatically recorded, this means you can focus on growing your business, rather than maintaining the details. There is also increased security in processing payments via digital methods, eliminating the risk of checks lost in the mail, or issues when cashing them.

Looking forward to 2021, we see a rise in payment technologies that will make purchasing even easier on customers and merchants alike. Let’s have a look at our predictions for 2021 in payments, and what we expect to see as growing trends coming up this year.

So, what are the new insights we’re getting that advised this article, kindly find below;

  • Contactless Payments
  • Multi-Currency Wallets
  • Diverse Payment offerings/ Collection points from Retailers
  • The emergence of virtual accounts for wallet transactions

1. Contactless payments

The most intriguing trend for me so far is the concept of contactless payments because this module takes away the cash mentality in its entirety. Yes, Nigerians can be quite a chore to things like this but then again Nigerians are easily excited about a solution they’ve never used but assured works perfect for their daily needs, all you need is one person to pilot.

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Nigerians are largely a cash-based society and despite the CBN directive to go cashless since 2014 we’re yet to see the actualization of that. Let me give you this; picture paying for your groceries at the local store or your bus fares by just tapping your card or smartphone. Take a moment, picture that scenario …easy, convenient, contactless!

COVID-19 has been the catalyst for governments, institutions, and individuals around the world to adopt digital payment services and this is becoming particularly visible in transportation, where we are beginning to see that individual ticket sales systems with a fragmented approach are already digitizing elements of the infrastructure and being replaced by end-to-end services.

2020 saw a rise in touchless payments, whether it’s through phones enabled with the technology, or cards that can be tapped on the payment terminal to complete a transaction. This payment type is easy and safe, allowing customers to make purchases with ease. Most new smartphones are enabled with touchless payment technology, and Visa’s Tap&Go is accepted widely. Merchants should invest in terminals that accept touchless payments, allowing their customers to swiftly make their purchases.

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The implementation is poised to be massive in emerging markets, where the use of cash is massive. The benefits of paying with a simple touch will go far beyond maintaining social distancing, as we hope to see a greater willingness of citizens to use cashless payment methods.

2. Multi-Currency wallets

The surge in the adoption of mobile payments has led to a consistent increase in e-wallet usage and penetration as well. By now, you may be familiar with e-Wallets – digital wallets that store your credit cards, allowing payments to be made via mobile phone. As these Wallets become more widely used, new features are being added to make this form of digital payment even more convenient for their carriers. One of these features is the ability to handle not only multiple cards, but multiple currencies.

e-Wallets can be used online or in-store with a device enabled for tapping for payment. With multiple currencies in a single wallet, shoppers save the high fees associated with currency exchange when making purchases.

It’s also great for travel, multi-currency wallets eliminate the need to exchange cash and keep it on hand. The balances can be managed online, and many of these wallets allow for currency exchange from within the app itself. Merchants using a multi-currency eWallet can receive cross-border payments with ease from their customers, in the currency they prefer. All with the safety and security features of a digital device. This is already in place but its adoption is still low, I see a surge in the multi-currency wallet system in 2021 and beyond barring government regulations.

3. Diverse Payment offerings/ Collection points from Retailers/Merchants

Merchants (i.e Vendors, retailers) reacted to the pandemic to the pandemic by moving to e-commerce, leveraging on internet banking to receive payments but the work is just beginning. Diversification of payment methods and /or collection points will be the crucial step to take in 2021. As consumers continue to embrace e-commerce, regularly interacting with merchants they have not bought from before, we will see a growing demand for new digital payment methods capable of meeting customers’ safety and security concerns. The ability to pay on delivery, ‘tokenization’, biometric cards, p2p payments, along with a variety of more traditional card payment options, will help create a landscape where the consumer can make decisions based on convenience, personal preferences, and knowing that they are protected against financial fraud.

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4. Emergence of virtual accounts for wallet transactions

Like VR games, you’re immersed in a virtual environment where you can perform certain tasks, but you’re not there in reality.

Virtual Accounts are a series of dummy accounts used to make and receive payments on behalf of a real account. Essentially, virtual accounts are a digital representation of your regular bank accounts such that account holders/customers can have stored value without the hustle and bustle of registering a traditional account; these also extend to virtual cards (and virtual wallets) which is a very convenient alternative to the use of cash and cheques. It gives card users direct access to funds in your operative or wallet accounts.

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These accounts can be used for making collections and payments online, businesses also use virtual accounts to manage cash flow. The virtual account numbers can be used by companies and businesses to reroute outgoing and incoming payments through the original account number, track expenses per each number, create a loyalty and reward system for employees, etc 

When done right, virtual bank accounts also ease regulatory stress on digital banks because the virtual account provider will typically provide all compliance needs on their behalf by underwriting them — so even non-regulated companies can offer these virtual accounts with the right partner.

Individuals can retain these accounts and use them to pay for goods and services, subscriptions, and general daily expenses – without owning a traditional bank account. That’s the catch.

COVID-19 may have prompted the early adoption of digital payments techniques that generate alternatives to the use of cash but 2021 is the year for consolidation as a real alternative in the day-to-day financial activities of the Nigerian.



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