Nigerian banks are using Facebook Messenger to onboard small businesses

Mastercard is working with Facebook Messenger to bring a digital payments and banking experience to small businesses in Nigeria, in an effort to incentivize Nigerian merchants to close the mobile payments adoption gap and bring them onto the formal financial grid. The payments giant, which has said it’s in the business of killing cash, is bringing this initiative to a country where 98 percent of the $301 billion in consumer-to-business payments is transacted using cash. A joint offering supported by Nigerian banks Ecobank and Zenith Bank allows small business owners to message a new Masterpass QR bot on Facebook Messenger and request it to enable payments by QR code. Upon receiving approval from one of the banks, business owners set up accounts, complete the onboarding experience in the Messenger chat and receive QR codes they can print to display at their stores or save to their phones. Customers pay by scanning the QR code, or entering the merchant ID associated with it if they don’t have smartphones. Mobile payments adoption by consumers has been slow in many markets, and is usually a chicken-and-egg problem: neither consumers nor merchants are fully equipped or incentivized to take advantage of mobile payments, which would benefit them both. Now Mastercard is bringing in Facebook to help it enable commerce on the ground in Nigeria. “There are many consumers who are not in the banking system, or they are but aren’t fully using banking facilities — as well as merchants who would actually accepting mobile payments but are not in the formal banking system,” said Raj Dhamodharan, svp of operating systems and social networks at Mastercard. “It’s really about solving both sides of the equation together in the market to move from cash to electronic payments so everyone benefits.” Facebook has formed a similar partnership in the U.S. with PayPal, to deliver better invoicing solutions for its Marketplace users over Messenger. Dhamodharan declined to say whether the company is working with other social network and messaging companies on similar partnerships, but said the company plans to replicate this initiative in markets across the rest of Africa and Asia, bringing more and more small businesses into the formal economy and generating more payments transactions. Mastercard has encouraged business leaders to take economic development more seriously; to stop looking at financial inclusion through their short-term returns lens and open up to the “enormous” money-making potential of bringing people into the financial system. It's also currently  working with Western Union to create a digital infrastructure model for refugee camps focused on mobile money, digital vouchers and cards in Kenya. “Facebook is a large network and we’re taking advantage of their distribution with consumers,” Dhamodharan said. “They use their applications to chat and often that leads to a conversation about commerce… People in many markets use messaging to coordinate sales, for customer support, to interact with consumers.” The banks and merchants can also use the Messenger bot to communicate with each other about notifications on a transaction or service related requests the business might have with the bank, Dhamodharan said. The real innovation, though, is in the bank onboarding experience, which is a long, arduous, mostly-offline process in most parts of the world. In the U.S., only six of the top 30 banks offer digital account opening for small businesses — and they hold 30 percent of the deposits in the U.S. small business banking market, according to a February study by Javelin Strategy. Digital account opening can also be a good marketing and customer acquisition tool, that lets banks offer digitally-savvy small business owners a frictionless omnichannel experience — which demonstrates digital competency that helps strengthen customer trust — as well as a chance to save on relationship manager costs, Javelin says. “There is a much more interesting case for using mobile as a technology to leapfrog the problems of everyday life,” Dhamodharan said. “As more business owners look at this as a quick way to increase sales and expand the customer base, they’ll look at this as essential to solve their everyday problems as opposed to it being a convenience to them.”