Chad Pollock, VP and General Manager, Visa East Africa
The future of payments is digital, and Kenya is leading the charge. New digital payment methods are constantly emerging and gaining widespread adoption, creating a thriving ecosystem where security and convenience are paramount for both consumers and businesses.
As a globally recognised leader in digitisation and innovation, driven by the widespread use of mobile money, increasing card payments, and a booming e-commerce sector—now the third largest in Africa with internet usage having doubled between 2018 and 2022—Kenya is at the forefront of this transformation.
This rapid acceleration is unlocking unprecedented opportunities, particularly for Kenya’s growth engine: Small to Medium Enterprises (SMEs).
For these businesses, which account for 30-40% of Kenya's GDP and provide jobs for 80% of the workforce, priorities such as security, user convenience, and international integration, in addition to affordability and access to B2B financial solutions, are critical for participation in the global digital economy.
The nation’s digital surge is fast reshaping the economic landscape, fostering financial inclusion by bringing more individuals and businesses into the formal financial system, and unlocking access to savings, credit, and insurance. This, in turn, has potential to fuel significant economic growth.
Globally, studies suggest that transitioning to a digital economy can generate 1-2% annual GDP growth, with even a 1% rise in card usage potentially generating an average $67 billion annual increase in goods and services consumption.
A SHIFT IN PREFERENCES, A SURGE IN GROWTH
A recent Visa-commissioned study, “Value of Acceptance: Understanding the Digital Payment Landscape in Kenya,” reveals a decisive shift towards digital transactions in the past two years.
During this period, approximately 40% of SMEs have adopted digital payment systems. Online SMEs show an even higher engagement, with 55% accepting online payments and 64% now processing payments via social media.
Driven by the 84% of SMEs who recognize that investing in digital payment technology is crucial for business growth, citing convenience (40%), cost savings (38%), and improved efficiency (37%) as primary motivators, the momentum is undeniable.
A significant 68% of all SMEs plan further investments in digital payment technologies, with over half (52%) intending to adopt contactless card payments. Furthermore, 52% of cash-only SMEs are also planning to embrace digital acceptance, signaling a rapid acceleration towards a cashless economy in Kenya.
This influx of new digital payment acceptors, combined with continued investment from existing users, promises significant expansion of the digital payments landscape.
In addition, a substantial opportunity exists to convert the remaining cash-only SMEs, as nearly all (91%) report concern cash payments, including robbery (62%) and embezzlement (52%). Over half (56%) also acknowledge lost transactions due to their lack of digital payment options, further reinforcing the benefits of transitioning to digital solutions.
OVERCOMING CHALLENGES, UNLOCKING POTENTIAL
Realizing the full promise of digital payments in Kenya requires addressing key challenges and building trust. With the fear of fraud being reported as a barrier to adoption, promoting digital payments as a safer alternative and emphasizing security features can encourage merchants to reduce their cash reliance.
Underscoring a key opportunity for payment providers to prioritize security and efficiency in their offerings, secure B2B payments and faster transaction processing are cited as key benefits, pointing to the potential for these factors being persuasive drivers for future adoption.
Beyond security and efficiency, merchants also seek more convenient B2B payment solutions (64%) and tools to communicate special offers (64%). Access to data and customer insights is also gaining traction, with a growing interest in tools to identify potential customers (62%) and analyze spending habits (projected 28% usage) being identified.
VISA: A PARTNER IN THE DIGITAL TRANSFORMATION
Visa is a true partner in Kenya's digital transformation, committed to fostering digital payment growth through strategic partnerships and targeted initiatives.
Anchored by our Nairobi-based Innovation Studio, the first in Sub-Saharan Africa, we are fostering co-creation of payment and commerce solutions that enhance security, streamline onboarding, and demonstrate the value of digital acceptance.
This includes collaborations with fintech leaders like Pesapal, programs like the Visa Africa Fintech Accelerator, and investments in technologies like Tap to Phone, empowering businesses of all sizes. A central aim is to build a robust and inclusive digital ecosystem through cross-sector collaboration and public-private partnerships.
To facilitate this, we’re working with the Kenyan government on projects to advance payments and eCitizen services, one such example being our collaboration with Pesaflow to optimize government digital payment platforms. This support also extends to enabling contactless payments with major Kenyan banks and telcos, transforming in-store and e-commerce experiences, and providing educational resources and best practices.
A COLLABORATIVE FUTURE
The future of Kenya’s economy hinges on the success of its SMEs, the engines of innovation and job creation. Empowering these businesses to thrive digitally is a necessity.
This requires a collaborative ecosystem—payment providers, financial institutions, businesses, and government stakeholders working together—to foster growth and innovation.
By pooling resources and expertise, we can equip SMEs with the tools and support they need to navigate the complexities of digital transformation, empowering them to embrace digital payments, expand their reach, and fuel economic growth.
Ultimately, the digital transformation is about building a stronger, more resilient, and more inclusive Kenyan economy. By working together, we can ensure our SMEs lead the charge toward a brighter future. -ends-
