Electronic payments; an Interview with a CEO

Prompt settlement of merchants will drive epayment growth —Apochi, MD/CEO, Unified Payment

Six years after the introduction of cashless policy aimed at promoting electronic payment (epayment) across the country, over 80 percent of transactions especially in the retail space are still dominated by cash due to apathy of merchants and retails to epayment channels via Point of Sale (PoS).
In this interview, Managing Director/Chief Executive, Unified Payments (UP), Mr. Agada Apochi speaks on how addressing this challenge will boost e-payment growth, and his company’s solution through the UP Hourly Settlement Service (UP-HSS).

YOU said that the apathy of the merchants seems to be the biggest challenge to the cashless and e-payment initiative, what do you think is responsible for this apathy?

The major reason for the apathy on the part of the merchants or retailers is that they want to have access to their funds on a timely basis.
So today when they sell and they are paid in cash they can use the money immediately. That way they can also increase their turnover. Some of them have limited access to capital so they want the money as soon as possible. That before today does not exist for electronic payments in Nigeria. But starting today there is no reason for that anymore.

Electronic payment

Because for every sale they record as long as they work with our company UP Or any of the partner banks that are working with us they will have access to their funds one hour after because working with the bank we will ensure that their account is credited one hour after they sell.

You are hoping that the UP Hourly Settlement Service will boost the move towards e-payment in the country. How will this happen?

It will happen because the small business particularly, over 90 percent of them today do not adopt electronic payment and the major reason is because they do not have access to their funds as quickly as they will love to.
So if we guarantee that they can have access to their funds which we can now do working with this partner bank, it means that they will adopt electronic payment and that will grow electronic payment in Nigeria.

You know that small businesses are the engine room of every economy and adoption of electronic payment also contributes significantly to the Gross Domestic Product (GDP) of every country that has adopted it and adopted it massively and that is what we hope to do in Nigeria.

When you consider the push towards USSD payments whereby you can transfer, is the UP-HSS solution not coming late or will it be that attractive to people who have been using USSD payments?

The solution is not coming too late and the reason is because USSD is just a technology that is being used whether or not the customer get the money instantly or one hour after or the next day or beyond is a different conversation. Secondly, it is not every transaction that you can do using USSD.
Furthermore, for every transfer there is a cost. But when you adopt the true means of electronic payments as different from transfer of funds, there is no cost to the person who is making the payment and because there is no cost for the person making the payment, an item that is being sold for N1 and the person is paying one naira and no N1 + X.

Then for the business owner, you will guarantee that the person will get the money one hour instead of waiting till next day. So once the money enters your account one hour after, you can also go and buy somewhere else using any of the electronic means of payment; and so you see that the money remains within the formal system and yet exchange of value continue from one party to the other.

You also mentioned that what we are presently doing in terms of e-payment in the country is still less than 10 percent of the potentials of the market. What can we further do to tap into the remaining 90 percent potentials?

There are some merchants or businesses that are doing over 50 percent of their sales on the electronic channel.

Percentage of adoption

However, when you look at the total retail payment in Nigeria, you will see that we are doing less than 10 percent because only few businesses and merchants particularly on the high street and big businesses has adopted electronic payment. There are different things that can be done to ensure greater level of percentage of adoption.

A number of them has actually started and have been working. We now have improvement on infrastructure. So there are very few transactions that fail now compared to when we have the cashless initiative in Nigeria. I think the very big thing that needed to happen is what we have started today which is having access to the fund on timely basis.

Can you explain a bit about how you came about this resolution, the technicalities or the processes involve?

Because of the unique role that we play, first as a multi-institution, secondly as a licensed principal member and acquirer of different payment schemes, we work directly with banks and we also work directly with merchants and over the years we have done a study of the needs of different stakeholders in the market and one of the needs that we identified is the need for businesses to have timely access to their funds.

If you look at it from even large businesses that borrow money from banks, there is an interest rate to be paid. Now, if they get their fund quickly into their bank account, if they are enjoying an overdraft, it will reduce their debit balance in their account.

It will reduce the cost of fund for them in addition to the fact that they can utilize that fund to restock and which will grow their turnover.

Technological ingenuity

So it is based on that and our own commitment as an organization to innovation to technological ingenuity that we came about this solution and we had extensive engagements with our stakeholders including banks and merchants and that is why we are here today.

How does UP-HSS work?

The way it works is that you go to your bank either as an existing customer or a new customer and you tell them that you want to adopt electronic means of payment provided by that bank working with UP and to the extent that the bank is working with UP, you can request that for transactions at your outlet whether it is online or a brick and mortar outlet, you want to be settled on hourly basis, and once you sign up with your bank and the bank is a partner to UP, and is using the services of UP, being the only organization that provides this service in Nigeria today, you are guaranteed that every hour you will receive credit in your bank account for the sales you have done.

Do you have all the banks on the system?

Today we have in alphabetical order, Access Bank, Diamond Bank, First City Monument Bank (FCMB) and United Bank of Africa (UBA). We have no doubt in our minds that other Nigerian banks will come to join the party because we need to grow electronic payment and one way to grow electronic payment is to keep Nigerian businesses and retailers happy and this is one way to keep them happy.

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