Electronic Payment Channels Set to Dethrone Nigerians' Age-old Preference for Cash Payments
By Acceler8now.com Investment Education Team
6th September, 2007
Okay, it's a habit you are much used to. I mean insisting on payment in cash for all transactions, even when huge amounts are involved. Piling up cash has not only been the norm, after all, it's also one way of demonstrating one's financial capacity. All those times you or your staff move bags of money to the bank, it obviously leaves no one in doubt as to the depth of your pocket. Even the bank staff begin to regard you with a lot of awe and that certainly will please anybody, not just you. Yes, I know too that, on a more serious note, there have been serious issues about cheques in our system. It has never been safe to take them, simply because it has never proved to be a major offence to issue dud cheques, irrespective of what is in the statute books. So, it has been a risk not really worth taking, since you were simply "on your own" if you took cheques and they bounced. Prosecution has always been long-drawn and costly and consequently, better avoided. The short-cut: avoid cheques and insist on cash.
Cash Cost, a Heavy Burden
Cash was always expensive to collect, protect and manage. Except for that risk of dishonour of cheques, nothing really could justify the maniacal craving for cash that has been our payment tradition. Showing off could not justify the potential loss of huge sums of money that is always a serious possibility when you stock or move a huge cache of pure currency. Besides the risk to the money, it's well known that the collateral risk of harm to persons handling or holding such money is always high. Any attack on the money could be an attack on life, as well. The value of life has never been easy to quantify.
Cash has also been expensive to hold in terms of its handling logistics. You probably have to invest in note counting machines and huge safes, if your volume is large. Staff have to be engaged to run your machine(s) or manually count your cash when you don't own note-counters. While they count your cash at the bank, somebody has to stay and witness it. You possibly escape the cost of insurance because it is the vogue over here for each person to carry his own risk, the potential consequences notwithstanding. Anyway you look at it, the whole trouble of cash collection is just not something to be quite excited about, except if there is no good option.
It's Time to Let Go
It could indeed be said that there wasn't too much of a choice, before now. That position is obviously arguable, but the benefit of the doubt could be granted anybody who takes that stand. After all, apart from the risk of bouncing, even local cheques took almost a week to clear. But that is, perhaps, as far as it goes, because, the reality is that significant changes have taken place that now seriously deflate any argument for massive cash collection. Consider these:
- the clearing period has been progressively shortened over the recent years, with upcountry cheques now due for value in just 4 days, that is, transaction (lodgement) date + 3. Local cheques clear in 3 days, T (transaction date) + 2, meaning that the waiting lag in each case is considerably shortened. While the customer can draw on the third day (after the morning clearing session) in the case of local cheques, he can also draw on the fourth day (that is, counting from the inclusive lodgement day) if an up-country cheque. Unless you are in extreme urgent need of drawing, these intervals should be tolerable, for now. Add the fact that banks also have products that can discount your uncleared effects and fund your needs, if you merit such accommodation.
- If you still do not feel comfortable about cheques, what about electronic payments that are very possible in the Nigerian environment today. There is no doubting the fact that the use of plastic cards is rapidly growing. Getting subscribed is definitely an easy process. So, just the way you insisted on cash payment, you could simply insist on electronic payment, which affords you immediate credit, even better than cash that takes a while to get into your bank account. This can't be a cumbersome demand on customers when it's so easy to obtain cards. So, you are unlikely to lose business - obviously not when you save your customer the burden and risk of carrying cash to you. To receive electronic payment, you only need to sign up for a POS terminal, again, a simple process.
 The Economy Benefits
The Nigerian economy has suffered the unhealthy burden of avoidable cash-handling costs, over these years. That avoidable waste is obviously one every Nigerian should make a contribution to staving off. While the problem of dud cheques remains one that needs a more frontal solution, the electronic payment option is today a viable platform, no doubt. All that is needed is just some mental adjustment. After many years of touching and feeling cash, it obviously needs some effort to adjust to not seeing your money physically. But its' much safer, more efficient and clearly much cheaper. It should be time to begin to jump into the wagon.
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