Expanding the Infusion of Virtual POS for Seamless Transactions
Who doesn’t love the start of a new year? It is a time for fresh beginnings and we are delighted to partner with Nearpays to deliver our first episode for 2024 where we delve into the mechanisms for Fintechs in positioning themselves via the infusion of virtual Point-of-Sales for fast-tracking transactions and increasing their acceptance for use by the market.
Nigeria, home of Nearpays and one of Africa’s leading countries for fintech, experienced a challenging financial period in 2023 with the cashless policy mantra which saw the apex bank implement measures to drive people towards less use of cash. This cash crunch led to a rise in digital transactions, evidenced by the paradigm shift in banking transactions from physical transactions to online transactions taking central focus. Hence, this shift in focus attests to the premise that the preferred mechanisms of transactions by users are less physical, virtual, and to a certain extent, contactless.
African consumers adopted cashless payments (% of respondents who reported using a digital means to pay)
Source: Author’s Construct, World Bank
NearPays, the full-service financial payment platform changing the Nigerian Fintech ecosystem with its smooth card payments and effortless transaction tracking technology, offers virtual Point-of-Sale (POS) payments through smartphones that allow users to scan debit cards with their phones for payments, thereby putting POS transactions “back into the hands of its users.” The company offers free virtual debit cards and online banking options for its customers, while its Rural Virtual POS technology enables financially excluded communities to conduct digital payments, even without having a traditional bank account.
Source: EY’s Global Fintech Adoption Index
The adoption of Virtual POS has proven to become a game changer amongst fintechs in the constantly evolving cashless payments sector. Point of Sale (POS) terminals have been widely used alternatively to cash when conducting in-store payments. However, virtual POS eliminates the need to purchase the POS machines, while still ensuring payment processing, transfer, and confirmation remain fast. This innovation is expected to shorten the time taken to confirm payments, thereby ensuring a seamless user experience.
Given the increasing rise of fees attached to POS transactions, using Nigeria as a case study, customers are increasingly shifting preference to bank transfer because of the ease and control it brings to online payments. However, the rise in the number of POS agents in the country paints a different picture. The Nigeria Inter-Bank Settlement Systems (NIBSS) revealed a total of 1.5 million POS agents in the country as of December 2022, signalling the wealth of opportunities for Fintech firms such as NearPays to capitalise on, given the need for those in the formal sector with a preference for bank transfers to still utilise POS services to transact with the informal sector.
Middle East & Africa have kept pace with utilising the cash for POS transactions, driven by the high percentage of informal sector transactions, influx of new investments, and regulatory shifts that have continued to shape the e-payments landscape on the continents.
Share of POS Transactions Made with Cash by Region (% of total payments)
Source: Author’s Construct, FIS Global Payments Report
Buzz Summary
NearPay’s full-service payment platform has positioned the company to accelerate its plans to implement frictionless payments, offering more uniquely designed products and services that would continue to change the dynamics of financial payments across Africa. The company has undergone the required compliance and certification processes to ensure that its payment infrastructure is designed to improve user experience.
Regulations of fintechs remain pivotal in facilitating the required structure for firms to accelerate growth regarding online payment. The Central Bank of Nigeria’s recent guidelines on contactless payment offer NearPays the regulatory backing to deploy innovative products and services. These guidelines and structures are crucial for fintech offering contactless payment to leverage. Hence, a need for unique products such as virtual POS to remain infused in facilitating seamless transactions across the board as its CEO Victor Daniyan believes that more Fintech startups will continue to embrace the virtual POS product powered by NearPays.
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