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Cashless Nigeria: Stepping on the pedals with QR code

Nigeria, through the Central Bank of Nigeria (CBN), has continually intensified efforts to promote a cashless economy. However, the use of cash for transactions as…

Nigeria, through the Central Bank of Nigeria (CBN), has continually intensified efforts to promote a cashless economy. However, the use of cash for transactions as conventional as it is has continued.  

The results of a survey conducted in 2020 show that despite the adoption of a wide range of electronic payments, cash is still king in Nigeria. It is the most common payment method chosen in stores, restaurants, and similar.

In 2020, some 27 per cent of payments in online retail were made with cards. Cash and bank transfers were the second most common payment methods. Cash-on-delivery is also popular.

Data regarding Payments On Jumia, Nigeria’s most popular online marketplace, indicate that most of the customers preferred to pay by cash-on-delivery.

To make payments on delivery, shoppers use the pay account of the marketplace and pay via SMS or QR code. E-wallets made up about 10 per cent of digital payments in Nigeria.

In furtherance of its mandates to, ensure the safety and stability of the Nigerian Financial System, promote the use and adoption of electronic payments and foster innovation in the payments system, the CBN in January 2021 issues the Framework for Quick Response (QR) Code Payments in Nigeria.

Quick Response (QR) Codes are a kind of matrix barcode representing information presented as square grids, made up of black squares against a contrasting background that can be scanned by an imaging device, processed and transmitted by appropriate technology.

These codes can be used to present, capture and transmit payments information across payments infrastructure.

The technology further enables the mobile channel to facilitate payments and presents another veritable avenue for promoting electronic payments for micro and small enterprises.

The CBN framework basically provides regulatory guidance for the operation of QR Code payment services in Nigeria. It aims to ensure the adoption of appropriate QR code standards for safe and efficient payments services in Nigeria.

Popularised by Chinese Big Techs Ant Financial and Tencent through WeChat and AliPay since 2011, more countries have since been inspired to adopt universal QR code systems.

Singapore launched its first universal QR code back in 2018, and in 2017 India’s Reserve Bank launched Bharat QR with Mastercard and Visa.

COVID-19 has forced governments in China, France, and Qatar to use QR codes to actively track the health status of their citizens – proving the technology’s relevance beyond payments.

And whilst it might seem that the popularisation of QR codes around the world could render card-based payment providers such as Visa and Mastercard largely redundant, this likely won’t be the case.

There are already instances of Visa and Mastercard card-linked payment methods which work via QR codes, such as Starbucks and WalMart Pay in the US, as well as PayZapp and PayTM in India.

In keeping pace with the global trend, Ghana’s central bank in 2020,  launched a universal QR code payment solution with HPS, making it the first African country to introduce a universal QR code.

The harmonisation of QR codes on a national level means Ghanaians can make payments to merchants from multiple funding sources – mobile wallets, cards or bank accounts – on any platform.

Ghana Interbank Payment and Settlement Systems (GhIPSS), a wholly-owned subsidiary of the Bank of Ghana, has been working with HPS to help edge Ghana closer to becoming a cashless society.

The central bank says the rollout is timely considering the World Health Organization’s advice to use contactless payments and avoid the handling of banknotes in a bid to slow the spread of coronavirus.

“At this time, our quest towards a modern, cashless society is more important than ever and we are proud to be the first African country to implement this universal QR code solution,” said GhIPSS’ CEO Archie Hesse.


Why QR Code?

Implementation of the QR Code payment solution is unarguably the biggest thing going on in the e-payment ecosystem in Nigeria today.

Not only that the global payment brands, VISA and MasterCard are involved, but the local biggies led by Interswitch and Remita are also working on their QR payment projects

Experts have posited that QR codes payment can be the best driver of mobile payment and POS in Nigeria if well dimensioned and implemented by the stakeholders. It can revolutionise the way payments are made across the country.

With demand for mobile flexibility, multiple applications are expected to spring up to meet the needs of both business and consumers alike.

These experts argue that Small businesses that cannot afford the inbuilt cost of traditional POS solutions would benefit a lot from QR code payments because it will improve the ease of making payments for goods and services. From a practical point of view, QR codes will enable customers to complete payments on the spot and speedily.

Another benefit is that QR codes eliminate the need for customers to pay with their cards at payment terminals, as the only equipment required is a mobile device such as a smartphone. This will certainly improve the overall customer experience.

Experts say, due to the encrypted nature of QR codes, they provide a more secure and reliable means of payment – arguably even more so than card payments.

The COVID-19 pandemic and social distancing measures have hastened the demand for reliable touch-free payment options. As a result, the QR framework is considered a welcomed development.


What’s new?

The Nigeria QR Code (NQR) Merchant App provides you with a unique and convenient way of collecting payments from your customers using state-of-the-art QR technology.

The app leverages the robust NQR platform to enable merchants and business owners to meet their customer’s needs conveniently and on-the-go.

The NQR Merchant App offers the following unique benefits: Seamless merchant self-registration; Sub-merchant creation and management; Swift QR code generation and merchant presented interface; Transaction history and real-time payment notifications.

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