Technology

Frictionless Payment For SME Businesses In Africa


Within the next decade, Africa is poised to boast the world's largest workforce, surpassing both China and India. This demographic surge fuels distinctive consumer behaviors, a rapid adoption of digital payments, and an unprecedented pace of economic development. For SMEs and global businesses, the current landscape presents an unparalleled opportunity to do business in Africa by capitalizing on the e-commerce boom sweeping across Africa via frictionless payment. 
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What is frictionless payment?

Frictionless payment is a form of offline or online payment with minimal barriers to purchase. They simplify the buying process, reducing shopping cart abandonment, checkout abandonment, and customer churn rates. In simple terms, a frictionless payment makes it easier for a consumer to pay and a merchant to accept in-person or via an online pay platform

Benefits of Frictionless payments for SMEs in Africa 

Frictionless payments have multiple advantages for SMEs and global conglomerates doing business in Africa, such as:

  • Improved customer experience: Frictionless payments provides a more seamless checkout or in-store purchase experience. Consequently, this boosts customer satisfaction and retention rates, leading to more repeat purchases, customer loyalty, and word-of-mouth advertising.
  • Increased business revenue: Research from GfK indicates that 57 percent of South African consumers delay purchases until a sale or special offer arises. According to the Bureau of Market Research (BMR), Black Friday 2023 in South Africa generated an additional retail turnover of USD 1.4 billion. This proves that there is immense revenue potential for SMEs in Africa. However, businesses can still miss out on this due to payment processor issues. Hence, frictionless payment allows SMEs to maximize the revenue potential among their target customers.
  • Reduced cart abandonment: Around 71 percent of potential customers abandon their carts because of payment gateway failure. Frictionless payments mitigate this by requiring fewer steps to complete an online transaction, providing a better and faster customer checkout experience.

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Challenges SMEs face when transitioning to frictionless payments

While frictionless payment ensures that customers don’t face any challenges when paying for your product or service, SMEs have to overcome several challenges while transitioning to frictionless payment. These challenges include:

  • Transaction fees: Large retailers can afford the cost of investing in mobile payment technologies and rolling out devices at their own costs, however, SMEs are already under significant pressure financially and hence this would be an extra overhead they cannot afford.
  • Ease of use: Ease of use on the merchant’s side can be a cause for concern. For example, how to manage the payment process when an employee does not understand how the mobile payment system works and how to resolve issues when faced with customers who want to pay using an unsupported payment method or device.
  • Perceived trust and security: A lack of trust by merchants in any of the multiple parties involved in the payment process can be a significant barrier to adoption. More trust is placed in larger telecommunication companies and payment processors in Africa as they are more likely to offer authentication, availability, data integrity, and confidentiality as some of the criteria relating to security that need to be addressed as part of ensuring that security and trust are embedded in the system and process.

For SMEs in Africa and global businesses looking to expand into Africa, understanding the market demand for frictionless payment is necessary for success. As the preferred payment gateway in Africa and a reliable partner for businesses looking to expand their operations in Africa, SeerBit understands this necessity for frictionless payment for SME growth in Africa.

This SeerBit paper on “Market Demands for Frictionless Payment in Modern SME Businesses in Africa” explores how SMEs in Africa can seamlessly transition to frictionless payments, thereby gaining a competitive advantage and flourishing amidst the ascent of Africa’s growing economy. It includes practical insights for SMEs looking to adopt or enhance frictionless payments, the impact of the regulatory environment in Africa, technology enablers of frictionless payments, and forms a crucial knowledge base for SME success in Africa, as well as for global businesses expanding into Africa.

Download the full paper here.