The future is mobile: how smartphone acceptance is bridging the digital divide
As ever more consumers prefer to go contactless, tapping into Android technology can offer the Central and Eastern Europe, Middle East and Africa (CEMEA) region’s smallest businesses an easy and affordable way to access the digital economy.
Until recently, paying in cash has been an inconvenient but widely-accepted part of supporting the smallest businesses – whether picking up a cold drink from a street-side vendor, grabbing a takeaway meal from a family-run food truck, or getting alterations at a local tailor. Cash has remained dominant for micro and small businesses: fewer than 10 percent of the smallest merchants in many emerging markets accept digital payments,1 and more than 60 million vendors across the CEMEA region are still wholly reliant on cash.
Going digital offers numerous benefits for micro and small businesses – access to a wider spectrum of customers, better productivity (leading to higher profitability), improved access to financial services.2 Yet, the perceived complexity and costs of doing so, particularly the outlay for expensive point of sale (POS) equipment, has been a major hurdle for many.
Instant, affordable access
The fintech sector is increasingly looking at how to move beyond traditional POS systems to offer convenient and affordable digital acceptance solutions to those smaller businesses that historically have fallen through the gaps of digital inclusion – whether kiosk vendors or independent service providers.
Visa’s Tap to Phone is one such solution that offers both digital inclusion to merchants of all sizes and easy, contactless payments to consumers. First unveiled in the US in January 2020 before launching globally in October of that same year, the technology harnesses the region’s high penetration of smartphones to offer merchants an accessible, affordable, and easy-to-use POS solution.
Using just a mobile app, it transforms current-generation, NFC-enabled Android smartphones or tablets (NFC or Near Field Communication is the technology that allows contactless payments) into software-based POS terminals, without the need to purchase additional hardware.
Once downloaded, merchants can accept payments in a matter of minutes: customers pay for purchases by tapping their Visa card, mobile phone or smart watch on the merchant’s mobile, which reads the NFC chip in the customer’s card or device. As well as being simple, Tap to Phone is also reliable and secure, building on the security of an EMV chip transaction, in which each transaction contains a dynamic cryptogram that cannot be reused.3
“Tap to Phone technology can transform the way the world’s 180 million micro and small businesses operate,” says Neil Caldwell, Head of Merchant Sales and Acquiring in CEMEA. “With the potential to turn two billion global Android devices into instant payment machines, it removes the need to invest in POS terminal, or be on-boarded into a payments system – which may feel often out of reach for the smallest merchants. By offering an affordable way to integrate with the burgeoning digital economy, these companies can operate more efficiently and more profitably, as well as expanding their customer base.”
Ultra-portable and convenient, Tap to Phone particularly benefits nomadic or service-based small businesses, accepting payments anywhere, and anytime. The customer experience is elevated, too, decreasing friction during the payment process (even for typically cash-based transactions, such as payment on delivery) and reducing queues.4
Tap to Phone also addresses consumers’ post-COVID-19 pandemic demand for contactless payments.5 With the pandemic greatly accelerating the adoption of digital payments,6 today’s consumers increasingly regard cashless transactions as a safer, more hygienic choice,7 with more expecting to use digital payment options when they shop.8
Tapping into the market
Visa Tap to Phone has proliferated quickly since its launch. The number of sellers using Tap to Phone has grown by 1,800 percent over the past year and, across the CEMEA region, Visa has already enabled 18,000 terminals in 10 markets, including Russia, Ukraine, Belarus, Kazakhstan, Uzbekistan, Moldova, Georgia, South Africa, Saudi Arabia and the UAE.9
Small and medium businesses have been at the forefront of Tap to Phone adoption, particularly among small-scale food vendors, such as local restaurants and food trucks. Using cash for commuting may also soon become a thing of the past, as the region’s transport sector harnesses the technology to make systems more efficient and customers’ experience easier and friction-free. Belarus was the first country in the CEMEA region where Visa demonstrated how Tap to Phone could eliminate the need for standalone ticket machines for passengers and additional validation hardware for conductors; while in Moldova, the public transport system in the capital city of Chisinau now accepts contactless Tap to Phone payments.10
A growing number of acquirers now provide Tap to Phone: Across CEMEA, 26 are fully certified in Russia, South Africa, Saudi Arabia, Kazakhstan and Russia. Around more than 30 are currently going through the certification process, putting in place strategies that targets the country’s micro and small businesses.
As Tap to Phone has expanded in the region, it continues to evolve and adapt to markets and businesses that were previously out of reach. For example, Mayasoft, a new solutions provider in Uzbekistan, is piloting a first-of-its-kind Tap to Phone project that functions over the country’s USSD (Unstructured Supplementary Services Data) infrastructure, as well as the Internet, enabling the technology to penetrate areas with poor connectivity and bandwidth issues.11
As uptake across the region continues to grow, more vendors and consumers than ever are tapping into the potential of digital payments. “With a global move towards cashless societies, expanding Tap to Phone’s reach is part of Visa’s ongoing commitment to digitally enable five million micro and small businesses in the CEMEA region,” says M. Tad Tilahun, Head of Products and Solutions in CEMEA. “It’s also revolutionising the way consumers go about their day-to-day transactions, ensuring that payments aren’t just faster and more secure, but are seamless, too.”
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1 Visa Tap to Phone press release
2 https://blogs.worldbank.org/psd/how-can-digital-financial-services-help-world-coping-covid-19
3 Visa Tap to Phone press release
4 Visa News Release: Visa Tap to Phone Transforms Payment Acceptance for Sellers
5 Visa Back to Business 2021 Outlook
6 The 2020 McKinsey Global Payments Report: http://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/accelerating%20winds%20of%20change%20in%20global%20payments/2020-mckinsey-global-payments-report-vf.pdf
7 Forbes, WHO Encourages Use Of Contactless Payments Due To COVID-19. March 2020: https://www.forbes.com/sites/rogerhuang/2020/03/09/who-encourages-use-of-digital-payments-due-to-covid-19/#2549508e41eb
8 Visa Back to Business 2021 Outlook
9 “Understanding The Future of International Tap to Phone Acceptance Study,” Visa
10 Visa News Release: Visa Tap to Phone Transforms Payment Acceptance for Sellers
11 Visa News Release: Visa Tap to Phone Transforms Payment Acceptance for Sellers
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