It is no secret that Person to Person (P2P) payments systems are ubiquitous in Africa, mainly driven by mobile money operators like MTN, Airtel, and Mpesa. According to a report by the World Bank, mobile money transactions in sub-Saharan Africa are projected to reach $25 billion by 2020.
However, business payment use cases lag behind. A survey by the African Development Bank found that only 34% of businesses in Africa use digital payments, compared to 63% in Asia and 82% in Europe. The reasons for this are that payment systems in Africa are not specifically designed for businesses, so they struggle to meet their needs.
The unique challenge with business payments is not just the movement of money - it is managing and reporting why money has moved.
While an individual can wake up and send money at will, businesses have unique process and data requirements to ensure money moves for the right reason and this can be reported with a very high degree of accuracy.
Here are the 10 must-have features for a payment system to work for businesses:
1. Product Assortment - Businesses come in different categories, sizes - their needs vary. We have FMCGs, Logistics, NGOs, Engineers, Consulting companies, Multi-nationals, Multi-branches - and so much more. How can a payment system be flexible or vertically narrow enough to meet their unique business needs?
2. Security - Money needs to be safe from error or fraud. Every penny must be accounted for. There must be supporting data to ensure money moved for the right reason. The system must be protected from bad actors and thugs.
3. Policy and controls - The platform needs to support different access roles and allow users only to perform tasks they are allowed to do as per company policy. Segregation of duties is a must.
4. Reporting and analytics - Businesses and finance teams need to manage their money and cashflows to do business efficiently. This requires action data and insights. Payment systems for business must be able to report every penny to the last decimal place using industry standards. like my former boss used to say, "In God I trust, for all others I want to see real-time reports”
5. Predictable pricing - Businesses need pricing models that don't cause surprises. Per-transaction, tiered pricing models are difficult to manage at scale. For businesses, payments should be flat-based and maybe scale with features used to make sense.
6. Deployment options - For the majority of businesses, a cloud deployment is sufficient - but many businesses because of their policies or regulation may require on-premise deployment or other unique deployment requirements. Payment system software should support this.
7. Integrations - Modern businesses will typically use several software vendors to meet specific business requirements. What they hate is duplication of effort to keep processes and data in sync. Business payment platforms should be able to integrate easily with other platforms e.g. accounting software.
8. Change management - Businesses hate surprises. Anything that will cause a change in how they work needs to be managed carefully. Good payments systems need to provide businesses with tooling to manage change without surprises.
9. SLA and Support - What businesses hate more than surprises is downtime and service unavailability as this more often than not causes revenue loss or sometimes reputation damage. It is super important for business payments systems to have strong SLA management and high-class support systems to ensure a highly available service.
10. Scalability - Businesses will operate multiple teams and departments, across different locations and geographies. They still have a need to collaborate and report on payments no matter their scale. Businesses payment platforms must be designed from the ground up to support multi-countries, currencies, teams, payments instruments, and more.
In conclusion, it is clear that the business payments space in Africa is ripe for innovation and growth. A payment system that can meet the unique needs of businesses, such as product assortment, security, policy and controls, reporting and analytics, predictable pricing, deployment options, integrations, change management, SLA and support, and scalability, is well-positioned to succeed in the African market.
