Visa, a global leader in payments, today released its new report, “Value of Acceptance: Understanding the Digital Payment Landscape in Kenya,” highlighting significant growth potential for digital payments, particularly within the small and medium-sized enterprise (SME) sector.
The report, based on face-to-face interviews with 254 SME owners/managers in Kenya conducted by 4Sight Research & Analytics, paints a picture of a thriving digital payments ecosystem.
A striking 84% of surveyed SMEs recognize the importance of investing in payment technologies for business growth.
This positive outlook is further supported by the 68% of SMEs currently accepting digital payments who plan to increase their investment in these technologies, including contactless solutions.
Cash-Only SMEs Face Challenges, Digital Payments Offer Solutions
The report identifies a significant opportunity to transition cash-only SMEs to digital payments by demonstrating the clear advantages.
Currently, 56% of cash-only SMEs report lost business due to customers lacking cash, while a concerning 91% cite cash-related security concerns, such as robbery and employee embezzlement.
These challenges underscore the potential benefits of secure, convenient, and transparent digital payment options.
While cash remains prevalent, the study highlights the advantages of card payments, including increased customer convenience, simplified accounting and sales management, enhanced business reputation, valuable spending habit insights, and multi-currency processing support.
Kenya’s Digital Payments Momentum Accelerates
Kenya is rapidly moving towards wider payment acceptance, with 40% of SMEs adopting digital payments in the past two years.
This growth is fueled by the understanding that investing in payment technologies, including card payments alongside mobile and digital wallets, is crucial for business expansion.
Key drivers for digital payment adoption among SMEs include convenience (40%), cost savings (38%), and improved efficiency (37%).
Despite this progress, nearly all digitally enabled SMEs (97%) still have cash-related security concerns.
This reinforces the argument for promoting digital payments as a safer alternative.
Among businesses already accepting digital payments, there is a strong demand for enhanced security, with 71% needing secure B2B payment solutions and 69% seeking guidance on payment security best practices.
The high satisfaction rate (69%) among SMEs using financial technology further validates the continued expansion of digital payments in Kenya.
“Kenya’s digital payments landscape is experiencing a dynamic growth, fueled by a rising preference for innovative payment methods and value-added services that provide enhanced security and streamline operations,” said Chad Pollock, VP and General Manager, Visa East Africa. “This shift presents a significant opportunity to boost both individual prosperity and broader economic development. By collaborating with our partners across the ecosystem, Visa aims to unlock the full potential of digital payments for all Kenyans, spanning individuals, merchants, and businesses of all sizes.”
The Value of Digital Acceptance for SMEs and the Economy
Digital payments offer Kenyan SMEs numerous benefits, including increased revenue through a broader, increasingly cashless customer base, improved customer satisfaction with faster payments, and reduced operational risks by minimizing cash handling.
Digital transaction records also provide valuable data, facilitating access to financing and stimulating growth.
Beyond these 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 indicates that the transition to the digital economy can generate 1-2% annual GDP growth.
A mere 1% increase in card usage generates an average $67 billion annual increase in goods and services consumption across 70 countries and territories.
Visa: A Partner in Kenya’s Digital Transformation
Visa is uniquely positioned to support Kenya’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.
Visa’s suite of solutions includes programs for specific merchant segments, innovations like Tap to Phone, Contactless Payments and Click to Pay, and resources for educating businesses about the benefits of digital payments.
