Edited by: Omotosho Ayotomiwa
In 2012, the Central Bank of Nigeria (CBN) initiated a new cashless policy to reduce the amount of physical cash in the economy. The idea was to promote electronic payment channels, and ever since then, Nigeria has been moving towards a cashless society. The country has introduced policies to reduce physical cash use and increase electronic payment systems.
The policy has been going on for a while now, significantly impacting both small and large businesses in Nigeria. So, let’s talk about the positive and negative effects of the cashless policy on companies and what they can do to better adapt and take advantage of its benefits.
Positive Impacts of the Cashless Policy on Businesses
Despite various organizations and bodies’ controversial outlooks on the policy, Nigeria’s no-cash policy has brought many positive changes to the commerce industry. Below are some advantages of the scheme:
Improved Efficiency and Productivity
One of the most significant benefits is faster transactions. Paying for goods and services becomes more straightforward, and businesses can complete transactions faster. Moreover, one can now use all the time spent counting and moving cash around for more critical tasks. It has made traders more productive and their operations smoother.
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Enhanced Security and Reduced Fraud Risks
Another massive upside of the no-cash policy is that it is much harder for thieves and fraudsters to rip businesses off. You know how cash-based transactions are always a prime target for criminals? Well, not anymore!
Many people don’t have to worry about getting robbed or scammed with electronic payment systems. Knowing their transactions are secure has given them more confidence and peace of mind.
Promoting Financial Inclusion and Access to Financial Services
The policy has made accessing financial services easier. With electronic payment, you no longer need a bank account to make payments. You can just use your phone or other devices to complete transactions. It has helped promote financial inclusion and enabled businesses to reach a much bigger audience.
Improved Convenience and Customer Satisfaction
In addition to financial inclusion, customers are way happier now, too. No more worrying about carrying cash or getting change – you can just whip out your phone and pay in seconds. These payment methods have made things more convenient for everyone involved and improved customer experience. So, it’s no surprise that businesses are seeing more loyal customers.
Negative Impacts of the Cashless Policy on Businesses
It’s not all sunshine and rainbows with the no-cash policy in Nigeria. Unfortunately, small businesses are feeling the most damaging impacts, including the following:
Challenges of Electronic Payment Adoption in Rural Areas
One of their biggest challenges is that not all areas have access to electronic payment infrastructure. Many rural areas in Nigeria still need reliable internet services, making it challenging for businesses in those areas to use digital payment systems. So, they’re stuck with cash transactions, which can be sketchy and inefficient.
High Transaction Fees and Unreliability of Electronic Payment Systems
Let’s not forget the high transaction fees associated with electronic payment systems. These fees can add up for small businesses and become a substantial financial burden. Plus, sometimes, these systems could be slow and less reliable, which can cause payment delays and other headaches.
Difficulties Transitioning from Cash to Digital Payments
Switching to digital payments can be a real struggle for businesses that rely heavily on cash transactions. They might need more resources or awareness to make the switch, and that’s sometimes neither accessible nor affordable. It’s a challenging situation, and some people need help struggling to keep up.
Case Studies and Examples
Let’s take a closer look at some real-life examples of how the cashless policy impacts businesses in Nigeria.
Electronic payment systems are making things much easier for taxi drivers and commercial bus operators in the transport industry. Customers can pay using their phones or other electronic devices, which means less theft risk and more convenience for everyone involved. But, some drivers have said that the high transaction fees and slow payment processing can make it tough to turn a profit.
Over in the retail sector, automatic payment methods are making things smoother and safer for many businesses. Big supermarkets and malls use point-of-sale (POS) systems to process payments quickly and securely. But, smaller retailers sometimes struggle to afford the high transaction fees that financial institutions charge for these payment services.
In the hospitality industry, hotels and restaurants can now give customers more ways to pay. That means happier customers all around! But, smaller businesses find it hard to buy and keep up with the equipment and software for digital payment processing.
Improving Access to Electronic Payment Systems in Nigeria
The cashless policy in Nigeria has had its ups and downs for firms. On the one hand, it’s made things more efficient and less risky regarding theft and fraud. That’s great for everyone since it’s brought more people into the financial loop and made customers happier. But on the flip side, businesses have needed some help getting their hands on these systems, dealing with high transaction fees, and switching from cold, hard cash to something more modern.
To improve this policy, we need to make it easier for people to pay up without breaking the bank. That means more cheap payment options, better internet in the sticks, and helping small businesses get up to speed on online payments. And let’s remember the different kinds of companies out there – we have to ensure they’re all getting the help they need to get on board with this new way of doing things.
So, what’s in store for the future of the cashless policy in Nigeria? Well, the policy has the potential to keep boosting economic growth and financial stability. Banks can save money by not having to handle as much cash, which means they can offer businesses and other financial services loans more efficiently. The shift towards online payments can make financial transactions more transparent and reduce the informal economy. That’s good news for the government because it can mean more tax revenue. It looks like the future’s bright for a cashless Nigeria!
Final Thoughts
The article discusses the positive and negative impacts of the cashless policy on businesses in Nigeria. The policy has improved productivity, security, and customer satisfaction. However, small businesses in rural areas need help adopting this payment method due to inadequate infrastructure and high transaction fees. Improving internet services and reducing transaction fees wcan help small enterprises adapt to the cashless policy more efficiently and faster.
