Why QR code payment would never succeed in Africa

Paying with QR code is so cool. All you need to do is bring out your smartphone, take a snapshot, and voila, payment is made. The simplicity and versatility are simply unparalleled. QR code payments have been adapted from in-store shopping; to online payments; to even paying for cable subscription on TV.

As much as you would love QR code, it’s not really a global phenomenon. While QR code is in use almost everywhere in the world, it’s more prevalent in China. It’s so popular in China that is regarded as a currency – it’s practically the only way to pay for anything. This is even more evident in that kids as young as four years may never have seen cash before. Remember, if you carry cash around in China, people will probably think you have lost your mind.

QR, which means Quick Response, code has a fascinating background. It was invented by a Japanese company called Denso Wave in 1994 as a means of tracking vehicles during manufacturing. Just imagine robots bringing out their smartphones to snap pictures of cars. That may not have been how it worked, but you get the drift. After a while, people figured that if QR codes could be used to identify car parts then it could also be used to identify things to be paid for. Before long, it was adapted to various situations. Considering that QR code is similar to a fancy barcode, it could now be put or printed on practically any surface with a display.

However, Tencent popularized the use of QR code for payments when it started embedding it into its WeChat platform. The accessibility and ease of use made for a viral adoption and the rest, as they say, is history.

So, if QR code is versatile, cheap, and cheerful, why hasn’t it been used to transform payments in Africa? I guess it’s easier said than done.

Seeing how successful QR code has been in Asia, many attempts have been made to bring this magic to Africa. But practically each of these has failed woefully. I recall a meeting I had with one of the global payments giants in Tanzania in 2016; they wanted to use QR code to make payments in the country but failed to read the tea leaves; the Telco they were pitching put them on the next plane out of Darussalam.

It’s not rocket science to figure out why QR codes schemes never work in Africa. Some are obvious while others require seeing beyond technology into the realities of the African space.

The lack of network effect is one of the major killers of payment schemes in Africa, QR code included. Quite a number of supposedly smart fintechs naively believe their innovative products can be scaled without leveraging on others; instead of establishing a common standard, they go at it alone. And usually watch the product die alone as well. Companies like Tencent and Alibaba who can define new ecosystems are a rarity. Majority of successful companies rely on common standards and collaborate actively with others to thrive.  By the way, there is now an EMV standard for QR code, it’s too little too late.

While the sale and adoption of smartphones have been impressive for years, the reality is that Africa is still an impoverished continent where 41% of us live below the poverty line. Being poor means only 33% of Africans can afford a smartphone even if they barely made it through getting a feature phone. QR code payments depend 100% on smartphones, and where the majority can’t afford smartphones, the chance of QR scaling is zero.

The beauty and elegance of QR code payments come alive when you use it; but needs a working Internet. Unfortunately, telecoms services in Africa are shitty because of many reasons; poor investment, dilapidated infrastructure, fiber cables getting sabotaged, sometimes thieves making away with batteries and other telecoms equipment. With a patchy network, payments get stalled, and after a few failed attempts that must have taken many minutes into completing a transaction, little wonder QR codes get abandoned

And even for the few that have smartphones, they hardly leave the mobile data on. Also, though most Africans get their internet from their mobile phones, data is still costly in most parts of the continent. Consequently, savvy users turn off their data; the chore of turning it on for just payment is significant friction that has made QR code payments not habit-forming.

Lastly, payments apps in Africa have poor usability, which doesn’t exclude even the largest pan-African banks. In fact, you could almost say that app usability is inversely proportional to the size of the bank; the smaller fintechs have snazzier designs and more responsive interfaces. Poor customer experience means it takes just a little too long to bring out a smartphone, unlock it, spend minute logging in, finding the QR menu, and getting payments done. Imagine a scenario at a retail checkout where a paying customer is spending minutes fumbling with her phone when cash and cards are faster. Here comes the death of QR.

While QR has stumbled across Sub-Saharan Africa, other payment methods, which are aware of the African realities, such as USSD and STK, have made significant progress. M-Pesa processes billions of transactions each year over STK. 35% of the over 700 million interbank transfers in Nigeria in 2018 were made on USSD.

Would QR code ever catch on in Africa as the infrastructure gets better and smartphones cheaper? Maybe. Maybe not. But for the time being, it has been certified dead on arrival, needing no post-mortem inquiry.

By 2050, traveling would be the past time of dinosaurs

The last time you got in a car, or endured a 10-hour transatlantic flight cooped up in a tiny seat, why did you do it? Why did you get up at foolish o’clock on a Monday morning to go and camp out in rush-hour traffic? It’s the same reason that a nomad gets on his camel to start his journey across a desert and that the executive in his Armani suit hops on his private jet: to get from one place to the other; to leave their present location and be in a new place; to experience a new place and all it holds. What if you didn’t have to get out of bed to get that intense workout, complete with the increased heart rate and adrenaline rush through your muscles? What if you could get to savor the taste of freshly baked Inuit bannock bread and French Macarons right from your kitchen on the other side of the world? What if you could feel the salty sting of the ocean on your face while looking down on the breath-taking view of the Shetland Islands from the top of Broch of Mousa without even taking a single step out of your house?

If we were to look at the history of transportation, we would conclude that it has traveled (every pun intended) a parallel path to that of industrialization and innovation. As technology got more advanced, man was able to go farther, go faster, see more, and do more. The novelty being somewhere else or seeing what is out there has driven man for as long as he’s been on the planet. The same reason Columbus built a boat and went in search of America is what pushes scientists to research and develop space travel. It is the same reason why writers and movie makers are still making a killing from selling time travel and teleportation.

I’m sure the first caveman who managed to figure out that he could get on the back of a donkey must have been considered a god. From that first bumpy ride to the jet age and then to conquering space, it’s always been about more: see more, experience more, explore more, discover more, have more influence, dominate more. All man seems to have ever wanted (like a greedy, needy baby who always wants more) is to get into the next new place, see what’s there and then move on to the next newer, shinier thing. It’s a classic case of curiosity that killed the cat, or better put, the greed that drove business. All we’ve ever wanted is more, to see what’s out there, to experience all there is. It’s the worst case of FOMO there ever was, and we’ve just been hopping from one invention to the next, all in a bid to satisfy this deep-seated hunger.

The question now is this: is travel really what man wants, or is it just a means to an end? Is the craze for building faster, cheaper, more efficient means of transportation just a matter of form over function? If man had somehow managed to unravel the mysteries of the universe, no one would have spent a red cent on researching space travel. Man’s best friend, technology (not his other best friend), in an ironic twist, is going to be the one to render travel extinct. 5G network technology is starting to roll out, virtual reality is being perfected, and IoT is getting cheaper: human existence as we know it is about to be turned on its head. Forget the four horsemen of the Apocalypse, these three are the ones to watch out for.

Just imagine for a moment that we come up with some sophisticated, super-cheap IoT cameras that can be strung all over the place. Cheap and cheerful. Tack that to a 7g network technology, and you have an immersive system that gives us a real-time Google Street View. To put the cherry on top, put a tech that does synthetic smell and taste, full-body haptic feedback suite; you could be literally anywhere you choose, doing whatever you wish, at the snap of a finger, or the press of a button. One minute, you could be swimming with hammerhead sharks in the Pacific Ocean and the next, be exploring the sun’s core (without getting roasted).

You could go practically anywhere and do anything you wished without the risks of accidents, plane crashes or becoming an inter-galactic barbecue. Say goodbye to speeding tickets, exhaust gases, long uncomfortable flights, the complications of atmospheric re-entry, the whole nine yards. With near-zero latency video, immersion and telepresence, your virtual experience could even be better than the real thing. So why bother getting in a car? Before you know it cars, planes, trains, and even spaceships will become relics of the lost age and talking about them will be like asking a teenager today if they know what a Walkman is.

By 2050, when nobody borders to travel anymore, our kids would wonder why we subjected ourselves to such cruel things like Keke Marwa and GoKada bikes. Jokes apart, immersive technology has a serious chance of reducing the need for travel because it would offer a better experience, subsequently reducing the negative impacts that cars and planes have on the planet.

Death by a billion transfers; the immortality of cash is exaggerated

‘Cash is king,’ so says the famous adage. But digital payments have been waging and winning a silent war against cash for years, but nobody seems to be noticing. We all say that cash can’t be knocked off, but we are so wrong because if you expected a bloody revolution where digital payments overtake cash in one fell swoop, you are barking the wrong tree. Digital payment has been like a guerrilla army, silently waging a war of attrition against cash.

In the UK, cash has been on a downward slide for years. In 2015, debit cards overtook cash, and by 2026, cash may join my ancestors. The size population wasn’t a problem before mobile payments exceeded cash usage in China. Bringing out wads of money in the Middle Kingdom would probably earn you an evil stare.

You would expect that a country like Nigeria, being a developing country, is immune to this, but the numbers say otherwise. Nigeria has about 18,000 connected ATMs as seen by industry data, and every month does roughly 72 million transactions valued at N550 billion. ATMs were the earliest and most reliable electronic banking channels in Nigeria, and they came with so much convenience.  Increased ATM usage is also helped by the fact that customers now have the flexibility of using other banks’ ATMs, as most of the banks are part of major interbank networks. Banks find it cheaper to pay fees to these networks as against setting up additional units in expensive-to-deploy areas. ATMs have been hugely successful.

However, the mobile explosion happened. First came mobile apps from Etranzact (native Java apps on Symbian phones) which at one time had 15 banks on its platform. People took to mobile technology in a way that has seemed impossible with financial services and products because people developed functional literacy around mobile phones – how to identify numbers, key in airtime tokens, read balances, etc. It helped that the mobile phone developers made the technology accessible and within reach of everyone, educated or not.  Then, USSD appeared on the scene. In 2014, GTBank, Fidelity Bank, and Zenith were the first three banks to go full scale on USSD banking for ordinary accounts; however, within two years, practically every bank has a full-service USSD banking offering for their customers

At the same time, telcos started expanding data services, and smartphones became cheaper. With improved customer experience and stable apps, the growth of mobile for services grew at over 100% CAGR.

In a pivotal moment in 2017, the launch of Alat by Wema showed what any bank could achieve with a mobile app in Nigeria. Alat, a branchless, paperless bank which provides financial services through its Android, iOS and web applications, is described as ‘Nigeria’s first digital bank.’ Beyond Alat, many successful apps have launched, such as PiggyVest, CowryWise, Carbon (PayLater), Wallet.Africa, etc.

Recent numbers showed that 79% of interbank transfers (an excellent indicator of retail digital finance usage) are driven by mobile phones.

Then the magic happened. In Q4 of 2018, interbank transfers overtook ATM transactions for the first time, and from January 2019, monthly interbank transfers have consistently exceeded ATM transfers. ATM volume shrank 4% in Q1 2019 as against Q1 2018 while interbank transfer grew 67% over the same period.

Quarterly qrowth of digital payments in Nigeria

Quarterly growth of digital payments in Nigeria

It’s clear, the people have spoken: Why travel 100 miles to get cash from an ATM while you can send the money to the recipient immediately from your mobile? Digital payment is particularly essential for financial inclusion as Nigerians in rural areas may not have immediate access to a bank branch but will most likely have access to a mobile phone which they can then carry out banking transactions on.

The implications of this may not be very apparent, but the impact would be cataclysmic for cash and for businesses that drive ATM transactions. Based on projections, transfers would do about 1.4b transactions this year while ATM usage would decline by 10% over the same period. Throw in the rumored reduction of fees; then you can imagine that fintechs that operate within the ATM space (device sellers, switches, card suppliers, etc.) have reached peak business growth.  It also means that as the convenience becomes apparent, there is going to be accelerated growth in transfers. Would this also affect POS and Web where the growth has been at 100%+ CAGR as well?

We also expect this to have an impact on banks and cash handling. But it’s a positive one. Cash operations is a pain for any bank, and the less cash they have to deal with, the longer in minutes the bank workers get added to their lives.

The verdict is in – Digital and mobile platforms are winning customers over, one mobile phone after another.

You won’t live forever. But carrot.ng can sort out your afterlife

On the long run, we would all be dead; a reality nobody can dodge. Considering that the grim reaper doesn’t usually do RSVP, what does it take to prevent the yam-pepper-scatter-scatter that often comes when someone dies all because there is no will left behind to take care of things.

Trust me, if you have ever gone through a probate process before, you (especially if you are a young wife) would want to kill that careless and unthoughtful dead husband again. It’s stressful enough to kill.

Of course, the reasons why people run away from having a will are many. Chief among them is “God will protect me.” Here’s the bad news; you can’t cheat death and you will die like everyone else. Even if you eat healthily, live in a gym, wash your hand every time you shake someone, and you don’t fly to Unilag without an umbrella, death is certain.

Another reason is the hassle of working with a lawyer. The average Nigerian doesn’t have a lawyer or think she needs one.

Here’s where Carrot.ng comes in. If you have 15 minutes to spare and for a token, you can create your will online and protect your little kids’ future. Don’t ever think your sisters or brothers are nice, if and when you die, they would probably kick your kids’ asses out on the curb. (maybe not, my siblings are from heaven!).

Don’t say I didn’t warn you enough.

*Disclosure. The founder of carrot.ng is family and this is what we do for each other.

Uber killed Yellow Cabs. GoKada may kill Okadas.

Uber came to Lagos around 2014 and went straight for the middle-class crowd albeit, that market wasn’t fat enough. They soon found out that any businesses targeting recherché segments in Nigeria never last long. Uber pivoted as the recession gradually wore off as ride-hailing became the go-to for almost every middle-classer.

It didn’t take too long before a pricing war ensured. Boy oh boy, it was bloody! By the time the smoke cleared, it was you and your cousins, that had the last laugh. Go on soun!

Baba Simbiat, the yellow cab driver was the collateral damage.

As expected, ride-hailing became so successful in Lagos that it killed Yellow cabs in high-brow areas. After all, only the well-to-do were taking yellow cabs before, so they all just ditched loyalty for comfort and value. Or why would you prefer to stand in the sun to roast or in the rain to take a public bath when you can get Uber at your doorstep with just an app? With a zero-brain-needed simple app, you request your ride and a (sometimes) decent man or pretty lady (on your lucky day) pulls over in an air-conditioned Toyota Corolla after some 10 – 15 minutes. How easier and fulfilling could commuting be?

To make matters worse for Baba Simbiat, Uber charges 33% less and ensures that you get as comfortable as you could be because the driver knows how much a five-star rating on his feedback dashboard could do for him. Baba Simbiat doesn’t give two flying horse legs. Woe betide you if you are deemed to be dressed indecently, Baba will remind you that your mom failed parenting 101.

Putting that into perspective, you pay N1,000 as the Uber fare for a 9 km distance, but Baba Simbiat will charge your sorry ass nothing less than N1,500 for the same journey in his rickety cab. How cruel! It’s like being asked to choose between Shawarma and Agege bread.

Funnily enough, Uber was not the first guy on the block to try out technology on transportation, but they seem to have done their homework well to have their model scale. The first shot at the use of technology for transportation in Lagos dates back to 2009 when the “Red Cab” was launched. Unfortunately, Citrans Global Limited, operators of the “Red Cab” failed to leverage on its first mover advantage.

Since Uber’s entrance into the Nigerian market, a flurry of other ride-hailing platforms has emerged, some of which include; Taxify, NaijaTaxi, CabMan, PamDrive, SmartCabs, Holy Cabs, Oga Taxi, GoMyWay, Alakowe, Smart Cab, Jekalo, Ridebliss amongst others.

But all that is history for those that care to know…

But then. traffic in Lagos has become so bad that a baby born at the start of one in the morning is old enough to enter JS 1 before it clears. Consequently, the utility of Uber is trending towards zero on bad days.

We are always in a hurry to get to our destinations and Okada is the next best thing. But then some of us can’t be found dead, alive, or even comatose at the back of an Okada and it’s not because of feeling fly; A trip to Igbobi will convince you. Nevertheless, Gokada and Max.ng have brought the Uber model to Okada business in Lagos.

The Gokada way makes a whole lot of sense if you don’t want to spend the rest of your eternity growing old inside the toxic Lagos traffic. And they are getting cheap enough to take a small dent on the regular Okada business; probably in the same high-brow areas.

Fortunately for the ingenuity of Chinedu Azodoh and Adetayo Bamiduro of Max.ng and Deji Oduntan of Gokada, Akinwunmi Ambode led administration has banned movement of all 100 cc motorbikes which are mainly driven by the regular “Okada” riders, hence giving room for them to scale with their 200 cc motorbikes. So, asides from getting you quickly to my desired destination, these guys also ensure that you don’t go home with a new set of rashes and infections anytime you use their helmet. That makes you more comfortable to get the next ride and beat traffic with class, wearing a fine green helmet.

Well, the jury is still out if they would be successful but trust me, the demand far outstrips the supply. If this can remain for the next 5 years, then we’ll all have to trust the “Invisible” to do its thing and wipe out all the Okadas from the street of Lagos

Now back to the Yellow Cabs. They have virtually disappeared from Lekki, Ikoyi, Victoria Island, and Ikeja areas, and I bet you, in 5 years, they could be 100% gone. Why? Because they would never be cheap enough to become a replacement for buses and never convenient enough to match Uber and Bolt.

That’s checkmate for Baba, he had better start thinking of how best he could make money off his car. Well, maybe he’ll run to Ibadan and repaint his vehicle, but I heard Taxify is doing stuff there already.