The option of outsourcing
On the other hand, you can outsource the online payment solution function to another firm and give them permission to accept cards and other form of electronic payments on their site.
When a customer enters his information on your site when buying goods or services, the outsourced payment service authorises the transaction and transfers the funds to your account. They will then charge a service charge or a processing fee for every transaction done. Muchemi cites efficiency, speed and traceability of transactions as the main advantages of a cash-lite system. This will foster economic gains for countries as it will mitigate against corruption through manual handling of cash which is also associated with higher costs and more risk of loss. Corporates and Governments will be able to deploy resources easily and more effectively. “People can be able to trade and sell anywhere in the world through e-commerce as a result of the link between the suppliers and consumers being broken down to a phone or computer screen.” He says.
A cash-lite system has many opportunities to offer. The broken link will greatly enhance and ease the volume of transactions in Business to business (B2B) commerce – business conducted between companies, Business to Consumer (B2C) – business between firms and the consumer, and Business to Government (B2G) which refers to transactions conducted between firms and government. This will be done with minimal exchange of cash.
Growth of payment companies
This system also provides more opportunities for firms offering online payment solutions such as JamboPay, Network Security provider and professional IT training providers that will in turn lead to more job creation. “The acceptance and willingness of corporates and public institutions has been overwhelming and has seen JamboPay grow in five years in terms of operations and expand to other countries such as Tanzania, Rwanda, Uganda and Senegal,” says Muchemi. The company recently signed a revenue collection contract with Nairobi County Government; it also has contracts with National Hospital Insurance Fund, Nairobi Water, Nation Media Group, Kenya Institute of Management among others.
Illiteracy in the use of information technology among a majority of the local people is seen as a bottleneck when it comes to bridging the digital divide. Muchemi advises firms to adapt the agency model to enable them reach more people and create compatibility between the two world in terms of a network of cash merchants willing and able to accept cash for electronic value and vice versa. “We have to review our payment regulations and come up with business models that will enable service providers reach clients from all spectrums of life to enhance the effectiveness of a cash-lite system.”
Long-term gains
In response to fears that the high cost of information technology will hamper access of majority of people to the system; he admits that the cost of setting up IT infrastructure is high but in the long run it will lead to a lot of savings and efficiency.
The East African countries according to him can transition to a cash-lite system through investment in the right infrastructure, harmonisation and digitisation of systems and operations that will lead to provision of high quality e-payment services as the market environment is good and ready for such a system. “Attaining an inclusive cash-lite system that maximises network effects and minimises unit costs and offering convenience for the may take time but not forever.
All players such as financial industry, telecom operators and governments will have to work together with a clear vision to transition to from where we are to the future,” he concludes.
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