Femme StaffIt is well known that Kenya is a leader in digital innovation and adaptation like Visa Payments, especially in the financial sector. For instance, we have nearly perfected the use of mobile money, which has transformed our economic landscape immensely.
We are also quite far ahead in other digital payments as highlighted in the “Value of Acceptance” report commissioned by Visa to look at how small and medium-sized enterprises (SMEs) in Kenya are increasingly recognizing the value of Visa payments, both as a business enabler and a tool for financial inclusion. While the study focuses mostly on Kenya, its findings resonate across many African economies where SMEs are the backbone of economic activity.
The role of SMEs in any economy cannot be underestimated. The ‘Value of Acceptance’ report by Visa reveals that 69% of SMEs that have adopted digital transactions in their businesses are quite satisfied, with the primary advantages being the reduced risk of handling cash, increased transparency, and faster transaction processing.
As much as there is a lot of progress in digital payments, there is a considerable number of SMEs who still seem to prefer cash transactions. Some of the reasons they cite for their reluctance are setup costs, charges, terms and conditions which they consider strict, and the fear of their money not being secure. Some businesses also view digital payments as complicated compared to cash transactions, with 36% of SMEs citing this as a barrier.
Cash-only merchants are however not completely averse, to digitization, with 24% expressing interest in acquiring POS systems, and 52% are exploring various digital payment options. Towards this, Visa has some incentives like low-cost devices for POS setup.
Why do SMEs need digital payments?
Digital payments offer numerous significant benefits, one of the most notable being an expanded customer base, which directly boosts revenue. In my case for instance, if I visit a merchant who only accepts cash, I wouldn’t be able to make a purchase since I’ve been cashless for years. Like me, there are thousands of others who prefer digital transactions, meaning cash-only businesses risk losing a substantial number of potential customers.
By embracing digital payments, SMEs do away with the risks associated with hard cash, like human errors. Cases of robbers targeting businesses and stealing large sums of money are still common, making security a major concern. Digital transactions provide a safer alternative by reducing such cases. Additionally, digital payments come with perks like automation of records, which reduces reconciliation errors. This increases accuracy in business operations since record keeping is one of the biggest challenges among SMEs. Digitization saves businesses a lot of time to focus on growth since they reduce the time spent on manual reconciliations.
Furthermore, in the event that a business is seeking financing from financial institutions, Visa payments provide accurate and well-kept records that in turn provide data that lenders can use to assess creditworthiness and loan eligibility. Banks and other institutions are able to see clear insights in cash flow and revenue patterns, thus determining the stability of the business. This transparency increases the likelihood of securing loans, better repayment terms, and access to tailored financial solutions. This goes for insurance too.
A significant 77% of digitally enabled SMEs believe that embracing digital payments will drive future business expansion. Additionally, the demand for secure business-to-business (B2B) payment solutions is growing, with 71% of SMEs seeking reliable digital payment platforms.
This is the right direction that should be embraced by all involved. Digitization can be the game changer that SMEs need to ensure the safety of money and to move their businesses forward.
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