Nigerian Fintechs Innovate to Overcome Payment Issues for Small Businesses

Digital payments’ usage is gaining momentum in Nigeria. But small businesses struggle to implement this technology, a challenge known as the “last-mile money problem". This is emblematic of the problems in agents providing digital transactions, especially in rural and underserved areas. To succeed as the country seeks to improve financial inclusion, digital payments must overcome these constraints.

The last-mile money problem generally refers to high transaction fees, foreign exchange charges, slow settlement speed and government rules. In Nigeria the issue could include factors such as weak infrastructure, limited access to digital payment channels, and slow internet. Such an environment makes it difficult for many small businesses in Nigeria to operate. In rural areas, where standard banking services are harder to come by and businesses are still trying to switch from cash to digital solutions, the problem is even worse.

A digital payment system serves as an important link for small businesses and organisations. They operate as enablers and help SMEs overcome hurdles in digital transactions. Digital payment systems often include essential services, such as cash-in/cash-out services that allow enterprises to collect and disburse money without a bank account. “Inadequate training or support from the fintech companies often leads the agents to confront issues that can influence the quality of their work,” he says.

Many fintechs are solving the last-mile money problem with easy digital payment solutions for small businesses. There are other developments in the field of mobile payment platforms, which require minimum infrastructure and can be used with simple mobile phones. The companies are teaching agents and making the process easier to help SMEs take digital payments.

The Nigerian government has realised the importance of digital payments to enhance economic growth and is putting regulations in place to encourage financial inclusion. The cashless policy of the Central Bank of Nigeria and the promotion of agent banking are moves in the direction of building an enabling environment for digital transactions. But these policies will only succeed inasmuch as they are implemented and the government, fintech businesses and agents collaborate.

Digital payments could be a great advantage for small businesses in Nigeria. These technologies help SMEs to streamline their operations, eliminate the hazards of handling cash and expand their client base. Digital payments are also enabling small businesses to have access to funding and other financial services to grow and do more for the economy.

As Nigeria moves towards a cashless economy, finding a solution to the last-mile money problem is key to the success of digital payments for small businesses. “Supporting agents and improving assistance for SMEs will enable the country to unlock the full potential of digital transactions, which will spur economic growth and financial inclusion.