In this latest podcast episode, “The Cash Conundrum with Michael Oluwole”, Darren Franks chats with Michael Oluwole, Co-Founder and Chief Growth Officer at Tap And Pay Technologies
The episode highlights the prevalent cash-based nature of everyday transactions in Africa, focusing on the challenges of achieving financial inclusion in a predominantly cash-dependent society. While banks and fintechs have addressed larger transactions, the majority, constituting 70%, remain cash-based, hindering efforts to establish credit profiles for citizens.
Identifying the Right Sector for Transformation
To address this issue, the company adopted a strategic approach, selecting sectors based on four key characteristics: volume of payments, frequency of payments, mode of payment, and transaction value. The initial focus was on transportation, specifically intra-city public transport, as it met all criteria.
Evolution from a Single Bus Company to Widespread Impact
The speaker shares a success story, narrating the company’s journey from partnering with one bus company in 2019 to expanding its footprint. The introduction of a contactless payment card, akin to the Oyster card, enabled users to fund it without needing a bank account. The results were transformative, leading to over a hundred bus companies, millions of users, and significant daily activity.
The Power of Data in Business Enhancement
The digitization of transactions provided valuable data insights. Bus owners could optimize routes, predict peak times, and make informed decisions, significantly impacting revenue. Additionally, the company facilitated a unique credit system, allowing users with a track record to travel on credit, enhancing financial inclusivity for the bottom of the pyramid.
Financial Inclusion Beyond Consumers: Empowering Merchants
The discussion shifts to the crucial role merchants play in financial inclusion. By enabling merchants to accept online payments, the company not only facilitates transactions but also empowers them with valuable data for business expansion. Micro-merchants, often neglected in traditional banking systems, benefit from tailored solutions, including access to credit and resources.
Competing with Habits, Not Just Cash
The conversation emphasizes that the primary challenge lies in changing entrenched habits rather than merely replacing cash transactions. The company strategically approached the shift, recognizing the need to work with regulators, bus owners, and users simultaneously. The unexpected opportunity presented by the COVID-19 pandemic accelerated the adoption of digital transactions, illustrating the power of regulatory support.
Transactional Model Innovation for Microtransactions
Contrary to the assumption of traditional transaction models, the company’s approach involves charging per transaction for microtransactions. By understanding both merchant and user behaviour, the company created a system that allows for efficient batch processing, ensuring merchants receive value promptly while users experience a seamless and swift payment process.
In summary, the podcast episode showcases a company’s journey in revolutionizing digital payments within Africa’s transportation sector. By addressing the challenges of cash-based transactions, focusing on changing habits, and innovating transactional models for microtransactions, the company has played a pivotal role in promoting financial inclusion and shaping a new digital payment ecosystem in Africa.
