Money transfer is a mode of payment through cashless systems. Since the first money transfer happened over 100 years ago, it has gone through different forms and methods before the emergence of online money transfers. Money transfers over the decades happened via telegram- Western Union was the first to do this; Moneygram was also a big player-before revolution in money transfer with the electronic transfer. Electronic transfer reduced the waiting time and cost of money transfers, although it still required people to be physically present in bank buildings and queue up before processing transfers.
Technology came to the rescue with online money transfer, which now has an outsized role in the overall payment ecosystem. With the widespread internet penetration and adoption of mobile phones in Africa, more and more people are using internet banking, mobile systems, e-wallets and digital technology like Blockchain to make money transfers. The volume and value of online transactions have continued to grow since hitting a new record of $116 billion in the third quarter of 2020, just after the COVID-19 lockdown-per Nigerian Inter-Bank Settlement System (NIBSS).
Compared to the traditional banking method of transfers, online money transfer is more cost-effective, convenient, safe and takes less time. Money transfer happens for several reasons; remittance, sending money to relatives, payment for goods and services etc.
How it affects businesses
These advancements in money transfer methods have significantly impacted businesses as trading relies on payments. In Nigeria, for instance, payments made through online transfer methods have increased every year since 2012, according to Central Bank of Nigeria (CBN) E-Payment statistics. Although the volume of transactions via online transfer channels is still behind electronic transactions, its continued growth should be of consideration to businesses. (Something to note; on this CBN statistic, direct debits can also be carried out online, via web or apps.)
When streamlined to just online businesses, all forms of online money transfer become predominant for payments over others, including cash on delivery.
With the expected continued growth of payments via online transfer methods, businesses must position themselves to take advantage of online money transfers by keeping up with systems that allow online money transfers like the following;
- Enabling online payments: Giving customers the option to pay on the internet is the best way to expand your business beyond borders and increase revenue. People want convenience, and nothing provides it more than online shopping. Getting your business online is the first start; enabling payments through digital channels follows.
- Powering payment pages for mobile: Payment through mobile transfers is the most common type in Africa. A 2020 Instant payment annual statistics released by NIBSS revealed that 78% of total instant payments in Nigeria in 2020 were done on mobile devices. It’s similar in several other African countries where the number has increased due to continued internet penetration.
- Easy-click payment for faster checkout: Making payment as seamless as possible increases conversion for your business. One of the ways to do that is by storing payment credentials. When paying with a card, a returning customer should only have to input a little to save time. All the additional fields should be pre-filled with previously saved data.
- Offer a wide choice of local payment methods and currencies: Customers want payment methods they are familiar with at checkout, which is often the local option. As a business, it is essential to accept local payments to reach more people and improve the payment experience: the more payment alternatives you offer, the more conversion.
These are difficult to pull off, with businesses still facing many online money transfer payment challenges like technical issues, security problems, disputed processes and transactions, increased transaction costs, regulatory issues and compliance.
With a trusted payment partner like Fincra, businesses can avoid these challenges in money transfers and enjoy a seamless payment experience. Fincra’s payment platform empowers businesses to reach more customers across Africa and the world, Receive Payments, Make Payments and settle funds globally.
With Fincra’s Receive Payments, businesses can receive payments from customers anywhere in the world in several currencies through cards, transfers and Virtual Accounts. With Virtual Accounts, businesses can accept GBP, EUR and NGN payments and settle these payments into their Fincra Wallet with no hidden charges.
Make Payments enables businesses to send money in EUR, USD, GBP and NGN while beneficiaries anywhere in the world can receive it in their preferred currency. Beneficiaries can accept payments through their bank accounts or Fincra Wallet.
Through a single API integration or merchant portal, businesses also have access to Chargeback management and services that will help them expand across multiple markets.