Chinese lending to developing countries has come under sharp focus since the release of several reports that have reshaped the debate. Unsurprisingly, ... many news reports, like the BBC’s “China: Big spender or loan shark?” are ringing alarm bells. But these reports should rather prompt new thinking on how to establish a more efficient and sustainable lending regime.
In most African markets, the plethora of local payment methods alone – mobile money, local cards, direct bank transfers – is enough to leave IT departments overwhelmed as CIOs try to figure out which stress-free payment solutions to implement quickly.
Getting a business to accept payments either via the website or mobile app can be as simple or as complicated based on how ready the establishment is in their strategy and internal processes.
Cellulant recently held a Twitter chat with some of Africa’s payments and fintech experts – Wiza Jalakasi and Mbugua Njihia, who are both technology entrepreneurs, and Carol Mbasinge, a product manager at Cellulant – about payment solutions, requirements for businesses and the challenges merchants and developers face when it comes to payment solution integration.
From this rich conversation, a common thread started to emerge. This article is a synthesis of these conversations and my own experiences being in the payments space for well over 10 years now.
Requirements for accepting digital payments
The raison d’être for any business is to generate profit sustainably, and therefore revenue collection is at the centre of that agenda. In today’s economy, the need to accept digital payment has been accelerated by the ongoing global pandemic. However, cash is still king when it comes to trade and commerce. Therefore, it is the primary medium that any other payment method will be competing with.
What do businesses and organisations need to have in place before accepting digital payments? Internal processes have to be in place first. A lot of value is lost due to poor internal processes.
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Digitisation of payments tends to speed up the rate of transactions, as the friction in the payment process is reduced on the consumer end with all other operational dependencies of the business working alongside the payments. e.g. when a customer orders food or groceries online, they expect it to be delivered as soon as possible.
This checklist, though not exhaustive, gives some fundamentals on how businesses can ready themselves to integrate a payments solution:
- Map out the customer journey for all your consumer segments. This may be different if you are selling physical vs digital products/services.
- Review current organisation payment methods and process, and identify current pain-points. e.g when customers pay via mobile money, the funds take long to appear, thus delaying order fulfilment.
- Define the outcomes and criteria the business would like to realise from digital payments.
- Carry out a cost-benefit analysis. Although the pandemic has forced most businesses to find ways of accepting digital payments, it’s not every business that needs to make the shift. This is often determined by the social-economic status of your main consumer demographic.
- Examine the back office. There’s no point in opening the floodgate of orders if fulfilment will be a bottleneck. This has the potential to not only lose you your most loyal customers but also ruin your brand’s reputation.
- Think through the implementation and roll-out plan.
- Ensure every department and everyone in the organisation who plays any role in the customer journey is aligned, from the marketing department to sales to the warehouse and customer service.
What to look for in a payment solution
Speed of transactions and settlements: The velocity of money is essential in any supply chain – like how fast a customer can pay for goods or services, how fast goods can be ordered from a supplier. It is a fact that electronic money moves at a much faster rate than cash. When integrating payment solutions, the duration of settlement between the payment processor and the business should be realtime or near realtime.
The process ought to be as frictionless as possible for the customer, who doesn’t care about the intricacies of the payment services provider’s (PSP) operations. All they care about is how soon their product or service will be delivered.
Transaction transparency: As tech entrepreneur Njihia points out, no business wants opaque variables relating to their collections, which might include but are not limited to hidden charges and convoluted cascaded pricing. It is crucial that this is spelt out clearly in the contract between the business and the PSP.
Payment processing fees: Clarity on payment processing fees and policies is important, especially for online merchants. This is because businesses look at transaction costs from a net margin perspective and more often than not, the cost has been factored into the product/service catalogue.
Security: The increase in online transactions is leaving many businesses prone to an increase in cybercrime. Your website or mobile app ought to be secure in collecting customers’ card data. Depending on the PSP, there are those that will provide end-to-end security and encryption of customer data by redirecting them to a more secure site then back to your site to finish the check-out process. Check for or ask for conformity to key digital payment security standards such as PCI DSS and EMV.
Value-added features: Last but not least, businesses should also look at the value-added services that a PSP can enable beyond the transaction. These may include messaging, loyalty coupons and rewards or a payments processing portal that makes accounting and reconciliation easier.
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