SMEs should leverage digital platforms to cut costs — Paga Co-founder

The co-founder of Paga – a leading mobile payment company, Jay Alabraba has charged SMEs to leverage digital platforms to cut costs. He said this while speaking on the growing adoption and challenges of electronic payments amid the COVID-19 pandemic, among other issues in a recent interview the Punch. Below are details of the interview:

How is the COVID-19 crisis altering the payment system, especially since lockdowns were introduced to contain the pandemic in the country?

When certain options close, people look for alternatives. While we have also had a lot of people interested in Paga, we have about 15 million users on the platform today. There are many people that did not consider using digital channels but they were forced to do so by what happened. We too have seen significant uptake. On a quarter-to-quarter basis, we have seen about 300 per cent increase at our last analysis of new customers coming to Paga, and this is a really high number compared to our standard. I think obviously, it is because of the restrictions that occurred during the COVID-19 lockdown; people were looking for alternatives and these are alternatives that they have always seen but they may not be compelled to try them. But they got the opportunity to try them and they like them, and we expect that this is the beginning of a new trend. Although this is a very difficult time, I think the outcome will be positive in the long term for digital payment.

How do you expect technology to affect the ways organisations will operate in post-COVID-19?

Every business should be passionate about the employees that do the real work. What does this work-from-home model mean? There are challenges in many things in Nigeria including electricity and the Internet; so we have to answer those questions. We are learning to do remote meetings, but there is a lot more to be learnt than to be done. We know that post-COVID-19 is going to be an exciting time for our industry and our company. We are making more investment, and our hope is that we are able to still structure the team in a way that it can be productive while we still manage our growing customer base. But there are many questions that we all know we need to answer.

How should small and medium-scale enterprises respond to technology adoption in post-COVID-19?

SMEs are the lifeblood of the country; so, there are many things that need to be done to strengthen them and make sure that they have the right tools to solve their problems. Apart from palliatives that our government can use to support SMEs, when it comes to payments, I will say adoption of digital payments is not really anything anyone should question or should not consider as an option now. People have to adopt digital payment because it completely eliminates a lot of the costs they are dealing with from the logistics standpoint to the safety standpoint. There are many platforms but I will always recommend Paga because we make it easier and provide very excellent costs for them to adopt. SMEs should be looking at leveraging digital platforms, not only for their digital payments but also for the work that they do because right now, it is really about cost reduction and making sure you are working efficiently with the resources that you have. And so, my general advice will be: just be cost-conscious and adopt digital channels, when you can, to build efficiency.

What challenges do you think businesses that are not tech-savvy will have to contend with?

The challenges will be many. Consumers are already looking for digital payment channels. There are problems associated with the use of cash. Let us take for example a trader in any market who at the end of the day is sitting with a million or more naira; there is a security risk, among others. Quite frankly, those problems are there but even the customer is now reluctant a bit to use cash. Where other people are handling cash, they don’t want to be handling cash because of the risk of infection, among others. I think SMEs that pay attention to this trend and are also able to react to customers’ needs to operate in a safer environment will benefit from it. Image going to a store where they tell you the only option to pay is cash; that is going to be a big problem for a lot of people. So, there is a need to adopt digital payment options; I think we are going to see a lot of that, and this is going beyond the idea of being innovative. You need to realise that SMEs that are adopting the new methods are also meeting customers’ needs for payment solutions that are contactless or do not involve cash, and they will probably get more customers. I hope COVID-19 will not last long in Nigeria, but the fact is that we still have to be careful and change how we operate in many ways so that it does not become a long-term problem for us.

Many people are still sceptical about electronic payment; how safe is it?

It is a very common concern. Let me first give kudos to the Central Bank of Nigeria for the strictness they apply in their expectations on authentication for transactions. Any electronic transactions that happen require customer authentication. You must enter your personal identification number. In many cases, you need to provide a PIN or a password or do something else to identify yourself. E-payment is significantly safer in Nigeria even compared to western markets. In the industry, the promise we make to customers is that as long as you keep your data, PIN and password safe, your account is secure. A lot of problems we see are due to poor awareness. You see people, who may not be aware, at the ATM and they are giving their PIN to a stranger to type in for them. Those kinds of things create the opening for frauds to happen. We need to continue to work with the regulator to ensure that customers are not defrauded based on very simple or silly situations like where they release their secret information. The big problem we have is that people are not careful with their PINs.

What are the main operations of Paga?

Paga is a payment and digital financial services company. We are solving two major problems: first, we are focused on making it easy for anybody to make a payment or receive a payment, and when we say ‘anybody’, we are talking about any individual or any business. And to be even more specific on this payment side, we are looking to rare opportunities where digital payments are utilised. This is all part of a drive that is not only a Paga mission but a national and global mission to reduce the use of cash and make payments safer and more efficient. Secondly, our goal is to deliver high-quality financial services to the mass market, and here, we are talking about everything that you may consider to be a financial service. Here, we work with partners like banks and insurance companies. We provide access to places to save money and places people may even be able to get credit or insurance. Many of these products are not things that today may even be very visible in the market but it is a growing career for us. Today, in the main services that we offer on Paga, I will say the public has taken up quite well money transfer – (sending money to any phone number or any bank account) and bill payment, among others.

In the case of money transfer, beyond being able to send to anybody with a phone or a bank account, you are able to receive from licensed international transfer operators as well, which means that from any other country where we have a partner, people are able to receive money through Paga in Nigeria.

Beyond the digital payment, which is available to any device such as a mobile phone or a laptop that is connected to the Internet, we have a channel that will support you, even the USSD with the basic phone.

Also, we have built a very large agent network in communities and hotel lobbies, among others. These are places where you can access Paga services. All these services are available to people in those communities where they are able to deposit money and withdraw money, do their transfers, bill payment, and the rest. This agent network is well known and very visible across the country.

We are licensed as a mobile money operator; we are also licensed as a national money transfer operator and regulated by the central bank.

What initiatives have you introduced to cushion COVID-19 effects and make e-payment easier?

There are several things that we have done to stimulate activities. We have provided price adjustment to encourage uptake of digital payment and help people reduce cash handling. For example, we support merchants and traders to receive money on Paga. You can get paid via Paga. For customers, we also did some price reductions; for example, you can do transactions below N5,000 to banks at no cost. We have always offered a person-to-person transfer. We have about 25,000 agents across every local government area in the country and these agents are also business people and members of the community. We do a lot of things around sensitising on COVID-19, and we are also providing advice on how they need to conduct themselves to make sure they stay safe while still providing this service.

How are you building confidence in agency banking?

The first thing is to make sure you are selecting the right people and that, at Paga, we have a very strict process of selecting only the higher-quality and trustworthy agents. They are quite interested in running an entrepreneurial business like this. They really care about what we are doing. We also create a platform for a viable business for the agents. We work with the agents to ensure the staff are well-trained and the branding is visible, not only to attract services to the agents, but also to ensure the services the agents render are fantastic.