Digital payments. What are they? How prevalent are they in Africa? How are businesses already benefiting in the space?
We answer these questions and more in today’s article.
Being at the forefront of the digital payments revolution in Africa, we have seen firsthand the benefits that came with jumping onboard the digital payments boat in the early 2000s as mobile money was taking shape, to date when mobile and bank payments are now seamlessly integrated.
What are digital payments?
Digital payments are any payments made electronically or online without the use of physical cash, basically going cashless. This range from mobile money to bank transfers and card payments.
Digital payments in Africa
In Africa, digital payments have continued to take root, but the uptick differs depending on the country. Indeed, 70% of the global total value of mobile money transactions are conducted in Africa.
The shift to digital tools, spurred on by the COVID-19 pandemic across the world, exposed the costly infrastructure loopholes and inefficiencies of a financial system worth hundreds of trillions of dollars, yet still largely dependent on individual processes, slow moving checks, and expensive invoicing processes.
From small businesses to huge multinationals, incorporating digital payments has begun to address some of these challenges.
Benefits of digital payments
When you switch to accept digital payments, you free up time, money, and energy to grow and scale your business. Your customers also benefit because now they can quickly and easily make payments, while you ensure your cash flow remains consistent and easy to forecast.
If you set up recurring billing and automate payment collection, as most of Cellulant’s customers have, this process becomes effortless. When you consider that the average B2B payment cycle takes about 35 days to complete and 47% of invoices are paid late, it’s clear that unless businesses move beyond paper-based payments, they will always be mired in inefficiency.
With digital payments, you can process payments extremely fast, allowing for instant cash application and automatic reconciliation, which has been proven to eliminate data entry errors and ensures your books are accurate. By embracing digital payments modes, businesses can manage their accounts receivable process more effectively, which leads to faster payment cycles and more efficient collections. Digital payments have several advantages:
1. Convenience & accessibility
With digital payments, your customers can self-serve and pay invoices from anywhere at any time. They can even pay directly through the emails and SMS they receive with a 1-click “Pay Now” button.
In addition, customers in the most rural areas of the continent can access your services through the most basic feature phones without travelling to find banks which may be inaccessible to them. This enhances financial inclusion all the more.
2. Low risk
Digital transactions are much more secure than traditional ones because they are processed by secure gateways which are hard to tamper with. Most platforms are heavily regulated and protected to keep your money safe.
In addition, the risk of theft or fraud that comes with cash management is eliminated.
3. Easily traceable
Details of digital payments are stored in a merchant-specific database. Both merchants and customers have easy access to payment information. This avoids ambiguity and confusion while tracking payments because you know where the money is at all times. This reduces chances of loss, theft or fraud that come with cash payments.
4. More options mean faster payments
There are several studies that prove that offering customers multiple payment options can lead to faster payments and improved cash flow. Tingg, for instance, offers customers locally relevant payment methods from mobile money to bank transfers and card payments.
For one, the need to queue up for physical payments, say, in the case of utility payments is completely foregone. Faster payments for you, comfort for your customer.
Secondly, digital platforms equip your business with the ability to issue automated reminders for monthly bills and invoices. This means that your focus shifts from following up on payments to other important growth activities such as expansion into new regions and countries.
5. Cost Management
Many payment methods are loaded with fees and soft costs, especially paper checks. One of the benefits of going cashless is that most solutions have fixed fees that allow for better planning, and businesses can choose the model that best suits their needs. Moreover, the costs of security and storage needed with cash are no longer necessary.
Some digital payment platforms offer very affordable transaction fees at business standard percentages, like Tingg. Both you and your customers get to enjoy speed at lower transaction costs.
What does this mean for your business?
Payment preferences are shifting toward digital transactions, driven by the desire to make operations more efficient, faster, remote, and secure for all. While some companies choose to keep traditional payments in their catalogue, this may result in more expensive and inflexible transactions in the long run.
Several industries have shifted to digital, touchless payments as a way to stabilize revenue and expand their business during COVID-19. This is likely due to the fact that 65% of customers now prefer using contactless payment options.
Cellulant is building and leading the charge for digital payments adoption across Africa with Tingg. Tingg by Cellulant offers a low-cost, frictionless payment gateway that automates manual processes, lowers transaction costs, and speeds up time-to-cash for business across Africa.
Banks, Merchants, and Multinational Businesses like Multichoice, Bolt, Ethiopian Airlines, DHL Africa eShop, Emirates Airline, have trusted and used Tingg to receive and process payments from their customers over the years.
As Africa’s foremost one-stop digital payments platform for every business transaction, Tingg is enabling and connecting businesses to a system that integrates ERPs for invoicing, payment processing, and reconciliation without the usual fees charged by credit cards or banks.
To learn how you can grow your business with Tingg digital payments, contact us today. We will be happy to walk you through the digital payments journey.
