‘Virtual cards Will Enhance Financial Inclusion in Nigeria’
ANDREW UABOI, Country Manager of VISA NIGERIA, speaks about the role of Virtual cards and Contactless solutions in advancing payment advancing financial inclusion in Nigeria.
What is Visa’s assessment of the current digital payments’ ecosystem in Africa and how would you appraise Nigeria’s readiness for the virtual cards and contactless innovation?
The payments landscape in Africa has continued to evolve. From manually processed cash transactions to seamless and convenient real-time electronic payment solutions driven by innovation and advancement in technology. Today, consumers and merchants in Nigeria are surrounded by a variety of payment options that offer them both safety and convenience and the acceptance has been heartwarming. Card payments’ progression started with the magnetic stripe cards, now down to virtual cards and tap-to-phone functionality, available in markets like South Africa. Contactless payment is growing rapidly especially in the COVID-19 era. Interestingly, Nigerians are showing that they are equally ready for this innovation, especially in this era of social distancing. During the lockdown, a huge number of people avoided shopping at a physical store. Our Covid-19 tracker shows that 71 percent of consumers started purchasing groceries online. More than ever, merchants and consumers all over Nigeria are looking for newer, safer, and more convenient methods of payments with virtual cards and contactless solutions as exciting prospects for Nigeria’s digital payments ecosystem.
Several payment solutions have emerged in the financial services sector. Tell us about virtual contactless payment and what makes it unique and acceptable?
Contactless is a form of chip card technology and like chip cards, it uses an advanced computer chip embedded in the card’s plastic to perform secure transactions. Just like the name suggests, it requires no form of contact. It is a quick, easy, and secure way to pay, which is perceptibly faster and more convenient than paying by cash. The experience is much swiffer for consumers, especially as smartphones are quickly becoming commonplace. For merchants, contactless technology speeds up queuing times and reduces the burden of handling cash.
How secure are these payment solutions?
Very secure, the Visa virtual cards have added security measures. They are protected by encryption technology and cannot be traced back to your account or to your business. The cards cannot be used to withdraw money, and they can expire immediately after they are used or after a short duration, this means that if anyone finds the numbers and tries to use them later, it would be unsuccessful.
For contactless, tapping to pay is secure because each transaction is accompanied by a one-time code. Unlike cash, tapping to pay provides an electronic record of your purchases and gives you all the great functionality and convenience of a Visa card. We believe that consumer education is essential in the fight against fraud. We want to help users spot fraudulent activity, and protect their sensitive information, as payments increasingly take place digitally. We are leveraging technological advancements to prevent, detect and decrease threats, we are also driving massive awareness and sustained consumer education.
Do you foresee any challenge(s) for this revolution, especially in the current context?
People’s lifestyle and shopping behaviour around the world has changed dramatically in the past year. And while the increased availability of online shopping and contactless payments is convenient, it makes it more lucrative for scammers to trick buyers into paying for goods they will not receive or obtain their personal information for financial gain. We saw a spike in fraud activities globally during the pandemic. When there is a new form of payment, fraudsters are known to infiltrate and try to take advantage. Therefore, we intensified our messages around fraud detection during the period by sharing security tips. We do not see it as a challenge but an opportunity to offer regular education to cardholders. Consumers are the first line of defense, and we believe these security tips and practices can help them keep their payments and personal data safe.
How is Visa supporting Nigeria’s Fintech industry?
In the wake of COVID-19, fintechs are taking even more impactful roles, 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 Central Europe Middle East and Africa (CEMEA), fintechs are part of an emerging community joining the rush to develop new services that will support these unserved segments. We have welcomed many of these fintechs for the latest edition of our Visa Everywhere Initiative (VEI), an annual innovation program and contest that connects financial start-ups and provides a global platform for them to showcase their innovations and ideas. The initiative has attracted over 1,300 applications from start-ups this year, with more than 800 of these global nominations including small business recovery among their focus.
How is Visa collaborating with other industry players and relevant government stakeholders to activate Virtual cards and contactless payments in Nigeria?
We absolutely appreciate the place of collaboration and believe that partnerships are key to strengthening the innovation pipeline, drive emerging technologies and, in the long term, safeguard the sustainable growth of the payment’s ecosystem. As part of our strategy to drive digital transformation, our work with clients, government, partners, and Fintechs aim to equip them with the technology, tools, and expertise to deliver new digital solutions tailored to their region’s needs. We also aim to help them navigate the payments space, develop game-changing products that deliver to real-life needs, and enhance their speed to market.
How does the Visa Virtual Cards and Contactless help to advance financial inclusion in Nigeria?
Financial inclusion is a simple idea: people and businesses can access secure, convenient, and affordable payment and other financial services, and use them to meet every day needs and long-term goals. Today, about half the adult world lives in the informal economy, dealing exclusively in cash. To be one of these estimated two billion people is to face financial barriers that make life risky, expensive, and inefficient. Financial inclusion helps put people on a path out of poverty, creates productive empowered citizens, fosters business opportunities, and fuels economic growth. The Visa Virtual cards and contactless payments solution are enablers of financial inclusion. Visa has spent the last 60 years connecting hundreds of millions of people and organizations to a global system that enables fast, safe, and reliable financial transactions. With our reach, insights and technical capacity, Visa is well-positioned to advance financial inclusion. In 2015, we made a public commitment to provide payments accounts to another 500 million people who do not use banking services as part of the World Bank’s call for Universal Financial Access by 2020. We are excited to pursue this goal, and we know it is within reach.
What is the economic relevance of virtual cards and contactless methods of payments to merchants and consumers?
We believe that virtual cards and contactless solutions will boost sales for merchants and increase safety for consumers. As lockdown measures fell into place, many consumers turned to eCommerce out of necessity. However, as the economy begins to reopen, consumers and merchants are beginning to visit physical stores for shopping again. Hence, merchants need to get ready for additional payments solutions, required to retain or ensure a repeat purchase from a consumer who walks into a physical store. Also, as more and more people continue to adopt them, virtual cards and contactless payments are likely to become a strong economic contributor and a must-have for businesses to remain competitive moving forward.
The Covid-19 pandemic has affected how people shop and pay. Do you think this will enhance the acceptance of contactless solutions and virtual cards?
Overtime, there have been more opportunities in the payments space that can be leveraged to provide better solutions for both consumers and merchants. Now that the COVID-19, pandemic is forcing a catalyst for growth, discussions on the need for contactless solutions alongside alternative payment options are gaining prominence. During the lockdown, a huge number of people avoided shopping at a physical store. Our Covid-19 tracker shows that 71 percent of consumers started purchasing groceries online. This is strong evidence that the COVID-19 pandemic has further accelerated the adoption of digital payments around the globe, including Nigeria. Little wonder why Nigeria stands alongside South Africa and Kenya as leaders of the e-commerce industry in Sub-Saharan Africa now.
How is Visa innovating and preparing its technologies for the adoption and acceptance of Virtual cards and contactless in Nigeria?
We have seen payments continuously evolve overtime and our technologies have also evolved with it. Highlighting our near field technology (NFC), we are getting to a point where cards are using phone technologies and payments can be carried out simply from the tap of a phone. Looking at the future, we want the Nigeria payment system to evolve to more contactless solutions like tap to pay, wearables etc.
What is the next level innovation within the VISA “pipeline”?
Africa is comprised largely of low-income communities that lack access to formal financial services. Without access to basic financial tools that allow them to save and build assets in a safe, reliable and affordable way, underserved communities are constrained in achieving economic security. Visa’s vision of being the best way to pay and be paid, for everyone, everywhere, is core to our business and consistent with the mission of achieving global financial inclusion. Our mandate is to ensure that more people are brought into the financial ecosystem and we intend to achieve this by developing relevant solutions for Africans by Africans. In a few years, we hope to see Nigerians making payments with wearables such as rings and tapping smart devices to complete payments at merchant locations.