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Tribune News Network
Doha
With coronavirus containment measures providing a significant boost to online payments and e-commerce around the world, the pandemic appears to be accelerating the transition towards cashless transactions in emerging markets, Oxford Business Group (OBG) has said in its latest report.
Concerns over the spread of the virus, along with the implementation of lockdown measures, have resulted in a significant global increase in cashless payments during the first few months of this year.
In Indonesia, for example, digital transactions rose by 102.5 percent year-on-year in the first four months of 2020, according to Bank Indonesia.
Meanwhile, in Kenya, one of the leaders in digital payments in Africa, the government has advised people to use online or mobile methods rather than cash as a precaution against the virus.
To help facilitate this, Safaricom, the largest telecoms company in the country and the owner of the market-leading M-Pesa mobile money platform, announced in mid-March that it would remove fees for all transactions under $9.42, while also increasing the daily transaction limit for small and medium-sized businesses from $659 to $1410.
Given these trends, analytics software company Statistica has estimated that, notwithstanding the possibility of a worldwide recession, global digital payments will increase by 14.2 percent this year.
The shift in payment methods has also driven retailers and malls to improve their online offerings.
For example, the report said, in the Middle East a number of larger malls have turned towards online platforms to stimulate retail activity during lockdowns and mall closures.
Even for firms with well-developed e-commerce platforms, adjustments were necessary to capitalise on changes in demand.
“We have had to adapt from a platform where at any time consumers can buy whatever they want to a platform that primarily makes sure consumers can access basic essentials, such as food, sanitary items, and personal hygiene products,” Juliet Anammah, chairwoman of online marketplace Jumia Nigeria, told OBG.
In response to rising online demand, e-commerce platforms were also compelled to improve or expand their delivery and payment services.
“One of the areas that were notably affected was payments, as there was concern about the cleanliness and safety of cash transactions,” Anammah said. “To address this, we migrated to contactless deliveries, and made sure that our deliverymen had hand sanitiser, wore masks and dropped items at the front doors.”
While influenced by the pandemic, the increase in digital payments also aligns with a number of longstanding government policies in emerging markets designed to encourage cashless growth.
In 2014 BI launched the National Non-Cash Movement in Indonesia, which seeks to limit cash transactions by promoting alternative payment methods.
This was supported in 2017 by a ban on cash payments for road tolls and the introduction of legislation to limit cash payments to a maximum of $7190, which was intended to curb bribery and money laundering.
The value of digital transactions in the country has risen dramatically from around $847.2m in 2017 to $10.4bn last year and is expected to experience continued growth amid COVID-19.
While the global percentage of people over the age of 15 who had a bank account stood at 68.5 percent in 2017, according to the World Bank’s most recent Global Financial Inclusion Index, the figure was just 34.9 percent in low-income countries.
The pandemic has undoubtedly accelerated the uptake of alternative payment methods and helped normalise their usage in emerging markets. However, Anammah believes there are a number of factors that could determine whether such a shift will endure over the long term.
“The COVID-19 pandemic will encourage more people to move away from cash transactions to the extent that they have a choice,” she said.
“In fact, we have seen recently that many of our customers in Nigeria do not want to use cash if possible. This choice is based on multiple factors, such as access to devices with digital payments, and the cost of the transaction and payment solution. It is important to breakdown all these elements make sure the cost of digital transactions is sufficiently low to encourage more people to go digital,” she said.
Doha
With coronavirus containment measures providing a significant boost to online payments and e-commerce around the world, the pandemic appears to be accelerating the transition towards cashless transactions in emerging markets, Oxford Business Group (OBG) has said in its latest report.
Concerns over the spread of the virus, along with the implementation of lockdown measures, have resulted in a significant global increase in cashless payments during the first few months of this year.
In Indonesia, for example, digital transactions rose by 102.5 percent year-on-year in the first four months of 2020, according to Bank Indonesia.
Meanwhile, in Kenya, one of the leaders in digital payments in Africa, the government has advised people to use online or mobile methods rather than cash as a precaution against the virus.
To help facilitate this, Safaricom, the largest telecoms company in the country and the owner of the market-leading M-Pesa mobile money platform, announced in mid-March that it would remove fees for all transactions under $9.42, while also increasing the daily transaction limit for small and medium-sized businesses from $659 to $1410.
Given these trends, analytics software company Statistica has estimated that, notwithstanding the possibility of a worldwide recession, global digital payments will increase by 14.2 percent this year.
The shift in payment methods has also driven retailers and malls to improve their online offerings.
For example, the report said, in the Middle East a number of larger malls have turned towards online platforms to stimulate retail activity during lockdowns and mall closures.
Even for firms with well-developed e-commerce platforms, adjustments were necessary to capitalise on changes in demand.
“We have had to adapt from a platform where at any time consumers can buy whatever they want to a platform that primarily makes sure consumers can access basic essentials, such as food, sanitary items, and personal hygiene products,” Juliet Anammah, chairwoman of online marketplace Jumia Nigeria, told OBG.
In response to rising online demand, e-commerce platforms were also compelled to improve or expand their delivery and payment services.
“One of the areas that were notably affected was payments, as there was concern about the cleanliness and safety of cash transactions,” Anammah said. “To address this, we migrated to contactless deliveries, and made sure that our deliverymen had hand sanitiser, wore masks and dropped items at the front doors.”
While influenced by the pandemic, the increase in digital payments also aligns with a number of longstanding government policies in emerging markets designed to encourage cashless growth.
In 2014 BI launched the National Non-Cash Movement in Indonesia, which seeks to limit cash transactions by promoting alternative payment methods.
This was supported in 2017 by a ban on cash payments for road tolls and the introduction of legislation to limit cash payments to a maximum of $7190, which was intended to curb bribery and money laundering.
The value of digital transactions in the country has risen dramatically from around $847.2m in 2017 to $10.4bn last year and is expected to experience continued growth amid COVID-19.
While the global percentage of people over the age of 15 who had a bank account stood at 68.5 percent in 2017, according to the World Bank’s most recent Global Financial Inclusion Index, the figure was just 34.9 percent in low-income countries.
The pandemic has undoubtedly accelerated the uptake of alternative payment methods and helped normalise their usage in emerging markets. However, Anammah believes there are a number of factors that could determine whether such a shift will endure over the long term.
“The COVID-19 pandemic will encourage more people to move away from cash transactions to the extent that they have a choice,” she said.
“In fact, we have seen recently that many of our customers in Nigeria do not want to use cash if possible. This choice is based on multiple factors, such as access to devices with digital payments, and the cost of the transaction and payment solution. It is important to breakdown all these elements make sure the cost of digital transactions is sufficiently low to encourage more people to go digital,” she said.
