The coronavirus has brought with it many changes to the way we live; chief amongst them has been, social distancing, a heightened sense of health and safety, disruptions to supply chains and changes to consumer patterns. Flowing from these has been the acceleration in digital payment solutions.
At the foundation of this has been contactless payment options, spearheaded by industry leaders VISA. True to form, even before the advent of COVID-19, VISA had begun rolling out, in collaboration with local partners, contactless cards.
With contactless solutions set to define the landscape moving forward, and Ghana being at the forefront of the digitisation agenda in the region, the Business & Financial Times (BFT) sits with VISA Country Manager, Adoma Peprah (AP), to dissect what contactless payment cards are like, touching on the underlying technology, the benefits to customers and merchants alike, regulatory considerations, why VISA’s solution is unique and the possibilities it presents.
B&FT: As a background to this conversation, do provide us, in two minutes, with a brief about the VISA contactless card and what you are rolling out for the rest of the year.
AP: With VISA we run a whole lot of solutions with different capabilities all the time and we have reached a point where we are rolling out contactless cards. This was a mandate that we had at the beginning of 2020, where all of our banking clients needed to have all of their POS devices to be contactless enabled as well as all the issued cards We have reached the point now where we feel that there is enough traction to make a big splash around contactless.
We are therefore introducing the system and technology as the primary means of making safe and convenient payments. As you know, with a pandemic, everybody is scared about touching surfaces. And so, with the contactless device you can literally just tap and pay and move on. But apart from that as well, it is a convenient way to pay, and it is faster.
There are benefits to all the various players in the ecosystem. We are very excited about this alternative, but we also realise that it is a new product and solution and there are significant changes in behaviour needed. We are working together with the industry where we plan to roll this out in a seamless way. It has been a while since we introduced something this innovative and on this scale in the Ghanaian market. The last one was with EuropayMasterCardVISA (EMV), which is an industry standard. We are so excited about this new way of making payments.
B&FT: Last year, being 2020, was a blackswan year, it was sort of a bittersweet year for all sectors, including those in the financial services. How did VISA as a business fare,especially in Ghana in 2020?
AP: I think it goes without saying, and this applies not just to Ghana, but basically across the world that shopping habits changed a lot in the past year and a lot of people prefer to shop from the comfort of their homes. I think a lot of people were skeptical about purchasing online, but during the pandemic, they had no choice but to be online and shop online.
One of the things that VISA has done is to be at the forefront of ensuring that payments remain safe as e-commerce continues to grow in Ghana. But while online commerce is growing, we know for a fact that in-store purchases have not gone away, especially as the restrictions in Ghana, and across the world in general, have been relaxed.
And some goods cannot be purchased online because consumers have to physically be at a shop to look at something, pay for it, and in those situations, card payments offer peace of mind as much as possible. I think the main thing is that people have turned online, but also as the pandemic-induced restrictions have lifted, card payments are giving folks the peace of mind to be able to meet those payments.
B&FT: Quite rightly mentioned, there has been a change in consumer preference consumer behaviour occasioned by the pandemic. Has that significantly shifted VISA’s strategy?
AP: I think one of the buzzwords during this pandemic has been ‘adapt’ and every organisation needs a strategy; you cannot continue, as you did. Even as a technology company, we need to shift a little bit in terms of how we operate and one of the things that we pride ourselves on is that VISA is not just about the business. It is about empowerment, working within the communities that we work in.
We therefore use the power of our network for good, and we created something called #WhereYouShopMatters, which is a global campaign that was focused on recovery in response to the pandemic, and the whole thing being that we encourage people around the world to think about the positive impact that they can have by shopping in their local community.
If you support Akua around the corner, or the lady that sells sanitisers around the corner, you are building up an enterprise. We all know that in sub-Saharan Africa, most businesses are small, medium-scale enterprises. Shop in your local neighbourhood and improve that person’s livelihoods. We also invested quite a bit in empowering SMEs across Sub-Saharan Africa, and we are now working to ensure that customers’ payment options are available to both merchants and consumers as Ghanaians, in particular embrace and adapt to the new normal.
B&FT: Whilst this is probably beyond the remit of VISA, from what you are saying. It seems that there should be an emphasis on local production to meet local needs?
AP: At VISA, we know we do not have all the solutions. We are in markets where the people that are here are the ones who understand the solutions that will solve the payment problems. From a VISA standpoint, what we want to do is basically help provide the platform that will help unlock the innovations that support the local payment points that people have, from a payment perspective. The whole thing is to work with homegrown fintechs and build solutions that will benefit the payments ecosystem. At VISA, we know that without expertise and innovation, we will not be able to enable and grow local businesses.
B&FT: Ghana has been at the forefront of digital transformation of its economy, among her peers, and in many ways, Ghana has perennially been a first adopter of many of these innovations, at least, south of the Sahara. What is VISA’s take on how the digital payment ecosystem system has evolved over time to what we have currently? Also recently, the central bank released a tall list of properly licenced institutions, when it comes to either Enhanced Payment Service Provider (EPSP) or Electronic Money Issuers (EMIs). What really is your take on how far we have come as a nation when it comes to digital payments and the whole payment ecosystem?
AP: I think that the payment ecosystem in Ghana has grown considerably over the last five years, and within the last year, especially, with the upgrade in innovative payment systems. It is helping big and small businesses meet their operations and that has been phenomenal. The Payments Act and the Fintech and Innovation office of BOG continue playing a key role in promoting the cash-lite and e-payments agenda.
B&FT: Indeed the central bank also has created a dedicated office that serves FinTech and the whole digital ecosystem called the FinTech and Innovation office. What does that say about the regulator of the industry? Is that forward thinking? Is that staying in tune with the times? Or just bowing to industry pressure?
AP: The setting up of the innovation office is a good thing. They have standardised a lot of things, in terms of how things operate, if you think about the regulatory sandbox, for instance. A short while ago, for payment solutions in various places, there was no guidance in terms of how those solutions came about. With the sandbox that they have created for example, there’s clear guidance in terms of if you want to roll out the payment solutions here in Ghana; these are the criteria that needs to be applied in order to be able to get a proper payment solution, providing guidelines.
Even think about crowdfunding, we know that it has been a way of life. We have all contributed to people’s funerals, weddings, etc. But with the vertical integration coming through with the policy guideline, it helps a lot, so that there is equity and control of the industry, and then also, people that are looking to bring together solutions, know what part of the market they can operate in. All these moves are forward thinking by the Central Bank. Just look at the fact that it is thinking about digital currency.
B&FT: On a similar tangent, how would you rate Ghana’s rate of adoption of technology by the populace, by the regulator, relative to its peers, south of the Sahara, particularly in similarly sized economies and perhaps on the global scale?
AP: Ghanaians are doing relatively well and if you think about it from a whole lot of different perspectives: mobile penetration, number of smart devices in circulation, internet penetration, adoption of social media, you will see that Ghana rates up there, always among the top three or five across most criteria.
Also, the majority of Ghanaians are really young. We have a very young and dynamic population, and they are embracing technology and embracing new ways of doing things. Initially, there is some skepticism, but once people get used to something, and they get into it and it works for them, they really embrace it.
B&FT: Flowing from that, contactless payments are still quite a new layer in the payment space. Last year we had a number of banks roll out contactless cards. Kindly elaborate (once again) on contactless payments. What exactly makes VISA’s solution such a great product?
AP: A lot of people have embraced e-commerce, as well but with the opening up of the economy, consumers are also beginning to visit physical stores and many of these stores have to get ready for digital payment solutions. And for me, I don’t know about you, when I go anywhere, I don’t give them my card. I ask them to point the POS device to me and let me be able to slot my card. I have not seen anybody who does not want to be able to keep safe. And contactless is the next great payment method, which helps in avoiding contact whilst buying, and making sure that it promotes health and safety protocols.
Contactless cards are powered by a short-range wireless technology that allows customers make secure payments between a contactless chip card, and the contactless-enabled chip cards terminal. We found that the contactless payment solution has become very useful as customers take precaution to reduce their exposure to COVID-19, which we know is spread through close contact. So, all you require is for customers to ‘tap and go’ on an enabled device and execute low value transactions. There is no requirement to enter a PIN or swipe the card or sign a receipt.
Since it is a new technology, all stakeholders have agreed on a limit on the value of transactions at GH¢100. Beyond that, you’ll need to key in your pin.
B&FT: What barriers do you see to the adoption of contactless payments. How do you think these barriers can be surmounted?
AP: It is a new way of making payments. People are used to inserting a card and they put a PIN. Now, you are going to have to ‘tap and go’, and if it is more than GH¢100, you put in a PIN. There is a lot of change management that is required across the board, from the issuer to the banks that provide the terminals as well as cardholders, everybody needs to get on board in terms of this. And constant engagements and reminders are required to support adoption.
One thing that we have noticed is that wherever there is a new form of payment, fraudsters will try to infiltrate and take advantage of it. And what we are doing is that we will intensify our measures around fraud detection around this period by sharing security tips. We don’t see that as a challenge, but as an opportunity to offer regular education to card holders, and at the end of the day consumers are the first line of defense and we believe that we should teach them to keep their payment and personal data safe.
Now, remember that the same protocols and principles that apply to contact cards apply to contactless cards, it is the same, it’s just the way of payments just a little bit different. All of the rigour and all of the things around protecting your cards, protecting your PIN, keeping their cards safe, all of those elements apply here as well.
B&FT: It goes without saying that these will first roll out in urban areas, should we expect to see them in peri-urban and rural areas?
AP: In Ghana, we have less than 10,000 POS devices and most of them are concentrated in Accra. The strategy would be Accra and all the other major cities – Tema, Kumasi, Cape Coast and Takoradi. These are the main trade hubs in Ghana. At the end of the day, we work through our banking partners. And so, where their infrastructure goes, it is where our capability and infrastructure go as well. We are very reliant and work with our banking partners, and as they expand into other areas of the country so we will we.
B&FT: What are the specifics you will say to customers to allay their security concerns?
AP: With contactless cards, fraud has been quite uncommon. That notwithstanding, we still believe the cardholders must take a few precautions to remain safe. These include make sure that your cards are not kept in easily accessible pockets, or bags that would draw attention to yourself, and we advise card holders to not let their cards out of their sight, not even for a few seconds.
We advise that card holders ensure that they make payments themselves and demand the receipt and ensure that they were charged the correct amount, that is the onus of the cardholder. There is the need for cardholders to maintain a close eye on their bank statements and be on the lookout for any unusual activity. And coupled with that we also recommend that card holders allow for alerts on their phones so that they are aware of any transactions that occur on their cards.
And lastly, any lost or stolen cards must be reported as soon as possible to your bank.
B&FT: Our emphasis has been on customers so far, what benefits will merchants receive from adopting contactless payment options?
AP: Merchants need to get ready for additional payment solutions if they want to ensure that they retain or get a repeat purchase from customers who come into the stores. By adopting and accepting new ways of payments, is one of the ways of doing that. We have found that contactless is the catalyst for digital payments enablement and is actually the foundation for other digital frameworks and form factors, especially for a merchant environment, which I think I mentioned before, where there is high volume of payments and low-ticket values.
Contactless payment is actually the perfect payment solution to have, and it can bring a lot of value to merchants that are cash-heavy by helping them to reduce the queue times, it encourages high transaction values and also minimise the risk and cost of handling cash. And all of these, when we put them together, contribute to the bottom line. And that is the benefit that we’ve seen for merchants across the board.
B&FT: Just as an aside, do you foresee the largely cashless society locally, perhaps, in the next decade?
AP: There is a long way to go. Despite the proliferation of mobile money and card payments, there is still a lot of cash in the market. I mean, Ghanaians are used to touching and feeling their money. There’s a lot of work to be done around this but the central bank of Ghana is pushing towards a cashlite agenda, there are phases that are being adopted – different phases -in terms of the cashlite agenda and what it looks like.
In terms of 10 years, I do not know what it would look like. I think there is still a lot of cash that needs to be mopped up. But as more and more people embrace options such as contactless payments, it will help.
B&FT: Finally, what next should we expect from VISA? What is in the cooking pot? What new innovations should we expect?
AP: I started off by saying contactless is really kind of the underlying technology that is used for a whole lot of different solutions. If you think about wearables, you know, like being able to ‘tap and pay’ with an Apple device, with the payment ring etc. All of that relies on contactless infrastructure as it is. Apple launched Apple Pay in markets where there is a proliferation of contactless payments.
Contactless and the adoption thereof is really kind of the track, if I can put it that way, the foundational track for a whole lot of underlying technology that can be used. It can be used to process transactions, including acceptance devices and related infrastructure. Now we know that Ghana has a very strong mobile penetration. So being able to pay on your phone by tapping on your phone, even probably merchants utilising your phone as a payment device, all of that is enabled by contactless technology. It is really important that we have this right.
For us at VISA we also know that Africa is composed largely of a lot of low-income communities that lack access to formal financial services, and without having access to these basic financial tools that will allow them to save both assets in the sensible, reliable and affordable way, we know that for underserved communities, it becomes harder to achieve economic security.
Now, the vision for VISA is to be the best way to pay and be paid for everyone and that is really core to our business and is consistent with our goal of achieving global financial inclusion. And also, we want to ensure that more people are brought into the financial ecosystem, and we intend to achieve this by developing relevant solutions for Africans by Africans.
We cannot say that we know it all and that is why we want to work with folks that are on the ground and understand payment solutions.
B&FT: Your last words
AP: We want to ensure that Ghana continues to be at the forefront of digital payments, we want to be able to have wearables and Apple Pay to be able to come just as Twitter has come to Ghana. We want Apple to bring Apple Pay here because we realise that in two, three years, that contactless has done so well and that base foundation is there for us to be able to do Apple Pay, Samsung pay, all of the different pays.
I want this to take off in Ghana. The industry must come together to see how to make contactless work locally. And it is something that I’m excited about, to be able to go out and explore a new way of making payments, which has taken off across the world. It would be nice for folks from everywhere to come to Ghana and know that wherever POS devices are, that they are able to make contactless payments just like they do in their home country. That’s my hope and I believe we will get there, and the market will accept it and adopt it if we get it right.