Businesses globally have been using electronic payment systems as a way of making it easier for their clients to do business with them. Advanced economies like the US and Canada use electronic payments more than cash as emerging economies such as Brazil and Mexico seek to increase efficiency by linking cash and e-payment systems.
Nigeria’s Central Bank has adapted a policy aimed at reducing the use of cash. This is expected to drive the development of a cashless payment system so as to reduce the cost of banking services and improve the effectiveness of monetary policy. In East Africa, Kenya has been a leader on mobile money, with Safaricom’s M-Pesa. In 2012, the Commercial Bank of Africa launched M-Shwari, a paperless banking service that allows customers to open and operate an M-Shwari bank account through their mobile phones, via M-Pesa, without having to visit banks or fill out any forms.
DansonMuchemi, chief executive officer, JamboPay clarifies that it is not entirely possible to avoid exchange of physical cash. He says a system that majorly uses electronic money and also allows for the use of cash can exist and is referred to as a cash-lite system. On the other hand, a cashless system is one that allows businesses or individuals to perform transactions through electronic payment and there is no physical exchange of cash.
Make your business cash-lite
A firm can set up an in-house system that processes payments or can outsource the function to firms that offer payment solutions. Setting up an in-house processing service requires setting up a secure server – a computer that uses encryption to make it hard for intruders to intercept confidential information. The site will then need a system that will manage the security of a message transmission on the internet through the use of an internet protocol known as Secure Socket Layer (SSL). SSL uses a cryptographic system that uses two keys to encrypt data – a public key known to everyone and private key known only to the recipient of the message.
The site will also need to be registered to a digital authentication site which will issue it with a digital certificate which validates that the site receiving customer information is the right one. This will ensure that customer information is encrypted and that the site is legitimate.
A firm will then need to purchase or develop shopping software that will allow and enable customers to choose a product and add to a shopping cart after which they can click a check out link that will take them to your secure server where they can enter their credit card information. Finally, you will require systems that will process the customer’s credit card information entered to the server and validate it with the card provider and transfer the funds to your internet merchant bank account.