Visa Launches Report On Kenyan SME Payment Trends

Visa has released a new report that paints a picture of Kenya’s growing embrace of digital payments. The study, carried out by 4Sight Research & Analytics, dives into the everyday challenges and triumphs of small and medium-sized businesses, showing how switching from cash to digital payments can streamline operations for SMEs.

As Kenya’s small and medium-sized enterprises (SMEs) grapple with the challenges of cash-only transactions, ranging from lost sales to security risks, a digital payments revolution is sweeping the business landscape.

According to the report, Value of Acceptance: Understanding the Digital Payment Landscape in Kenya, 68 percent of SMEs that currently accept digital payments plan to expand their capabilities by adopting advanced payment technologies, including contactless options. A strong 84 percent of respondents acknowledge the role of these technologies in fostering business growth, capturing the profound shift digital payment systems bring to business operations.

For cash-only SMEs, the challenges of relying solely on physical currency are becoming apparent. Over half  56 percent of surveyed businesses reported losing customers who didn’t carry cash, while 91 percent cited concerns over security risks, such as robbery and employee-related fraud. These barriers highlight the need for digital solutions that offer enhanced security, convenience, and efficiency.

The report shows steady momentum in Kenya’s digital payments sector, with 40 percent of SMEs adopting digital payments within the last two years. The shift has been driven by the perceived benefits of these technologies, including improved convenience, cost savings and operational efficiency at  40 percent, 38 percent, and 37 percent respectively.

Despite this progress, challenges persist. Nearly all SMEs embracing digital payments 97 percent still express concerns about cash-related security issues. Additionally, 71 percent of respondents seek more secure B2B payment solutions, while 69 percent desire better guidance on payment security practices. These findings indicate a significant opportunity for further education and technological advancements in the sector.

Chad Pollock, Vice President and General Manager for Visa East Africa, emphasized the broader implications of Kenya’s digital payments revolution.
“Kenya’s digital payments landscape is experiencing dynamic growth, fueled by a rising preference for innovative payment methods and value-added services that provide enhanced security and streamline operations,“ Pollock noted. “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.”

Visa’s initiatives, such as Tap to Phone, Contactless Payments, and Click to Pay, aim to simplify digital payment adoption. These programs, combined with merchant-specific education and tailored resources, are helping SMEs navigate the transition while capitalizing on the advantages of a digital-first approach.

The report emphasizes that beyond individual business benefits, digital payment adoption contributes to economic growth and financial inclusion. Digital payments help integrate the unbanked into the formal financial system, granting them access to credit, savings, and insurance. On a macroeconomic level, research shows that even a 1 percent increase in card usage can boost annual consumption by $67 billion globally.

For many Kenyan SMEs, digital payment is an essential tool for growth. They help increase revenue by reaching a broader, predominantly cashless customer base, enhancing customer satisfaction with quicker transactions, and reducing risks tied to cash handling. Additionally, digital transaction records offer invaluable data that can open doors to financing opportunities, further driving business expansion.

As part of Visa’s broader commitment to financial inclusion and digital transformation, the report provides actionable recommendations for businesses and government to unlock the full potential of a cashless economy.