An Analysis of Digital Payments in COVID and Post COVID-19 Eras
Margaret Iember Tivlumun, ACA, NIM (Chartered) – Finance and Tax Analyst – Abuja.
All across the globe, banks are changing the dynamics of their operations. In Nigeria, banks are announcing that branches nationwide outside of locations already on lockdown will be running skeletal operations by that no full banking services and cut in working hours. Some banks have already announced that, they will be closing by 3pm daily while working under strict Nigerian Centre for Disease Control (NCDC) guidelines on the use of face mask and social distancing as well as constant hand washing and use of hand sanitizer.
Nigeria as one of Africa’s largest economies, huge proportions of the economy are in the informal sectors that is Micro Enterprises and depend on cash. Nevertheless, the central bank of Nigeria has on several occasions echoed and re-echoed a ‘cashless’ policy for several years now even though the light is yet to been seen as when this will become a reality. The blame on the informal nature of Nigeria’s economy is not exactly an excuse for living behind the global trend. The reality is that it’s high time Nigeria as a nation begin to look the way of other African countries like Kenya and South Africa where mobile money solution is seen as “ a nice juice to have” as it will help in digitalizing minor and major transactions. More so, the Nigerian Economy in the light of promoting ease of doing business has not tapped fully into mobile-money solutions, Rather according to theafricanreport.com is still, “the old brick-and-mortar banks remain kings in the country”.
THE NEW ORDER OF DIGITAL TRANSACTION
The covid 19 pandemic has raised more emphasis on the importance of Digital Payment, improved technological and telecommunication services to help in the efficient and effective use of mobile money services. This will also go a long way in the post covid 19 era and their may be continuous reliance on the above services, this mobile money services will be guided by the guidelines for mobile money services in Nigeria as approved by the CBN in 2009. The situation of Nigeria indeed needs a change on how the regulators looks at the mobile money operations as just 40% of the people have bank accounts, so the economy would likely get a boost from the expansion of money mobile services. The CBN explains the decision to license mobile operators as being rooted in its policy goal of boosting financial inclusion, hoping to replicate the experience of Kenyan M-Pesa which is a phone based money transfer, financing and microfinancing service, launched in 2007 by Vodafone for Safaricom and Vodacom, the largest network operators in Kenya and Tanzania. 70% of Kenya’s adult population uses the service, and this is a significant number considering that 31% of Kenya’s GDP is spent through mobile phones based on the report of sitepoint.com and India where Mobile money services have helped lift 194,000 households out of extreme poverty. According to World Bank Report the rationale for the economic thinking of the CBN is that; the telecoms’ operators who already reach and offer their products to millions of people in remote, rural parts of the country which are mostly unbanked people can also offer them financial services and boost inclusion.
Based on the Quartz Africa report of 2019, in the wake of the CBN’s changes in track, MTN, Nigeria’s largest telecoms operator, with more than 60 million customers, has launched its MoMo Agent Mobile Money Services. Airtel Nigeria, Nigeria’s third largest operator, is expected to follow suit. 9Mobile and GlobalCom the country’s two other major Operators, have also been issued licenses to become payment service banks. This will further strengthen other Mobile money services already rendered by Commercial banks and Opay Digital Services in Nigeria.
In the same vein the new digital trend has seen many online transactions in terms of cash transfer, purchase for goods and even services as well payment of Utility bills, this is a clear indication that mobile money services has come to stay in Nigeria and its financial inclusion is quite timely and the triggering of it by COVID -19 pandemic has come to stay in Nigeria.
In basics of a mobile money platform system, cardholders can access their account information, check balances, transfer funds easily, pay utility bills, book for trains, airlines and bus ticket and pay for goods in merchant shops, this can also be done through the use of mobile wallet which could be closed, semi closed and open wallets.
THE IMPORTANCE OF MOBILE MONEY SERVICES
With the advancement in technology and telecommunication services digital payments present a number of benefits to individuals and businesses as it has emerged as a tool for financial inclusion. The use of digital payments saves time and cost that one would have incurred to queue at the bank to be attended to and most importantly in this era of corona virus one would likely be exposed to the risk of contacting covid 19. Moreso the use of digital payment provides convenience as one could easily stay at the comfort of his house and make payments/pay bills conveniently 24hours clockwise. In addition for businesses, it could help to cut down operational cost, reduction in paper work, provide variety of payment options to customers such as the use of Automated Teller Machines (ATM), POS, Credit Cards, Debit Cards and Online banking and payment of bills through cellphones.
IMPACT OF MOBILE MONEY PLATFORM ON POST COVID-19
Banks to run with Small Teams Commercial Banks and some Micro finance Banks in the post COVID -19 will have to deploy their services and maintain efficiency using small team or staff strength. The shift from physical transactions to more of digital payments will change the way banks operate especially as regards to staffing in the future and this may affect urban jobs and boost rural jobs as more digital payment points will be established and made available for those in the rural communities.
Move over to Online and USSD Banking.
The banking industry is likely to see drastic changes over in post COVID 19- as more banks and customers will move over to online and USSD banking. Digital banking in Nigeria might just get its revolution in post COVID-19 pandemic.
Changes in digital behaviour
With the wave of the pandemic, we may likely see new engagement and changes in behaviour. More people in Nigeria will start to use digital banking platforms or begin to rely on mobile money for their transactions. Those who are techphobia maybe left with no choice than to adjust and embrace the new order. With availability of Point-Of-Sale machines (POS), stacks of cash and run-of-the-mill shops, kiosks or stalls, Nigerians have begun entering financial services as partners to banks and fintech companies.
Conclusion
Finally, the COVID-19 pandemic has shown what the most essential banking services are and how it is up to the banks to determine how to run operations that will serve their customers better while maintaining their efficiency. Also the government and financial regulators should also device ways to support financial institutions on how best they can curb cybercrimes and fraud to enable the use of Mobile Money Services more efficient and effective. In the final analysis, it is expected that over the next few months that will run into post COVID-19, mobile money in Nigeria will grow exponentially, especially if the pandemic and lockdown lingers on.
