Safer Payment Solutions ‘ll drive adoption of prepayment transactions
Since the debut of ecommerce in Nigeria, a great number of consumers have always preferred paying for their products upon delivery, due to doubt on the quality of the product that the merchants might deliver. The American Express Digital Payments Survey (2017) showed that 73 percent of consumers have made three or more online purchases in the 12 months prior to June 2017. However, 27 percent said they have abandoned an online purchase due to security concerns around their credit cards.
Despite the mixed feelings in the use of online payment as noted in the foregoing, there is a positive aspect after all. Another survey of online shoppers showed that nearly half of the online shoppers, about 47 percent of them said they have increased the frequency of their online purchases over the last year.
According to 71 percent of merchants in the survey, the proportion of their annual sales generated through online and mobile channels increased over the previous year.
In Nigeria, JumiaPay is at the forefront of driving transactions on leading ecommerce platform, Jumia. The adoption of the payment platform is fast on the rise. An increasing number of Jumia consumers are making the shift from payment on delivery to prepayment through JumiaPay. Their preferences for choosing the payment platform differ. For instance, Mrs Blessing Atibioke’s preference for JumiaPay as a payment method on Jumia is hinged on the fact that refunds of payment via JumiaPay are faster than other payment methods, without the hassle of calling the Customer Care team for help. In essence, she prefers prepayment through JumiaPay because of its operational efficiency.
For Mr. Alex Fanika, his preference for prepayment through JumiaPay is hinged on its cost-saving benefits. Alex, who shops on Jumia One in bulk and resells to his customers, prefers to pay through JumiaPay because of the 5% discount he gets on each purchase. For a fledgling entrepreneur that he is, every discount he gets saves him a lot of money, which he can re-invest into his business.
Although, early predictions for the instant move to cashless society proved rash, however cash payments are beginning to dwindle. According to a report by the Federal Reserve Payments Study, non cash payments increased at an annual rate of 5.3 percent (3.4 percent in value). Debit, credit and ACH payments grew while check payments fell during this time period.
It is worthy of note that apart from these statistics, a greater number of people who will be shopping online is projected to skyrocket than the previous years. Statista, projected that in 2021, there will be 2.1 billion digital buyers worldwide, up from 1.66 billion in 2016. This means while some may be scared, others are very willing to use the online payment system. The more popular online commerce is, the more trust that people are likely to put into this type of service.
By 2026, it is projected that mobile payments will have passed the 50% milestone, becoming mainstream in most markets. According to the Ovum’s report, business owners must adjust their e-commerce marketing strategies to this new reality because experts have predicted that as payments generally evolve slowly, mobile devices will take the lead. Meanwhile, service development and adoption will speed up, and ultimately reduce the use of physical credit cards with a great potential to radically reduce cash payments.
Another determining factor for online payment would be the growing and bustling youth population across the world. This upwardly mobile class of the population is grappling with technology by the day and are willing to explore every opportunity they can grab. They are referred to as the millennials and the generation Z-ers.
Regarding the millennials, a research by Visenze stated that over 60% of millennials and generation Z-ers are likely to complete transactions on their mobile devices. The report also stated that about 80% of the youths prefer to learn about new products on a phone. The future, in that sense, is probably almost entirely mobile-first, as new generations are likely to put more trust into e-Commerce on this medium.