Survey: Over 84pc of SMEs accept digital payments

TANZANIA: THE Visa has launched a new report, revealing significant growth potential for digital payments within the Tanzanian market, particularly among  small and medium-sized businesses (SMEs).

The report, titled: ‘Value of Acceptance: Understanding the Digital Payment Landscape in Tanzania’ highlights Tanzania’s rapidly evolving digital payments landscape, with an impressive 84 per cent of the surveyed SMEs having started accepting digital payments within the past two years, citing lower fraud risks and increased customer convenience as key drivers.

The preference for digital payments is supported by the positive outlook of businesses that have adopted them. The report indicates that most digitally enabled SMEs acknowledge that digital payments play a significant role in driving growth.

Specifically, 64 per cent of these businesses consider accepting card payments as a strategic investment that can contribute to their future business growth.

Additionally, the report highlights that over 50 per cent of SMEs on e-commerce platforms are actively accepting digital payments, demonstrating a growing digital payment ecosystem.

“The research findings paint a promising picture of Tanzania’s growing digital payments landscape,” Mr Chad Pollock-, General Manager and Vice-President, Visa East Africa, stated.

“The benefits for businesses, consumers and the broader economy create a powerful opportunity for growth. Visa is committed to working with our partners across the ecosystem to unlock the full potential of digital payments for all in Tanzania – for individuals and businesses alike,”

The report underscores a significant opportunity to introduce digital payment solutions that offer convenience comparable to cash, such as ease of refunds, along with enhanced security.

By emphasising these key attributes, the report suggests that both merchants and customers can be encouraged to incorporate digital payments.

This opportunity is further emphasised by the growing awareness among SMEs of the limitations of relying solely on cash transactions.

The report indicates that over 30 per cent of cash-only businesses have experienced lost sales or transactions because customers did not have sufficient cash on hand.

This demonstrates an increasing recognition of the benefits of diversifying payment options and providing digital alternatives.

The research identifies several key challenges hindering the wider adoption of digital payments in Tanzania.

While 64 per cent of small businesses recognise card payments as an investment, many have encountered issues with these payments, including payment failures due to technical problems reported by 47 per cent of merchants, and the high cost associated with acquiring a POS terminal.

The report recommends addressing these concerns to enhance the acceptability of digital payments.

Additionally, it suggests that a significant number of SMEs in Tanzania seek value beyond basic transactions, and there is potential to offer integrated solutions that combine enhanced security and value-added services such as loyalty programs and data-driven insights.

Encouraging digital adoption among consumers is also important. The research suggests educational campaigns to shift consumer behaviour and promote the adoption of digital payment methods, as well as public awareness initiatives.

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Digital payments are crucial for Tanzanian SMEs, boosting revenue through a wider, increasingly cashless customer base, improving customer satisfaction with faster payments, and reducing operational risks by minimising cash handling.

Digital transaction records also provide valuable data that facilitates access to financing, stimulating growth.

While cash is still seen as quick and convenient, there’s scope to introduce digital payment solutions that offer similar convenience and security, encouraging merchants and customers to adopt them alongside cash.

Beyond direct benefits, digital payment adoption drives economic growth and financial inclusion, connecting the unbanked to the formal financial system and enabling access to savings, credit and insurance.

Research shows that the transition to the digital economy can generate 1-2 per cent annual GDP growth – a mere 1 per cent increase in card usage generates an average 67 billion US dollars annual increase in goods and services consumption across 70 countries and territories.

Visa is uniquely positioned to support Tanzania’s transition to a more digital economy. As a trusted advisor and partner, Visa offers a range of capabilities to help governments, financial institutions, businesses and technology providers enhance their digital payment acceptance maturity.