Kenyan small and medium-sized enterprises (SMEs) are increasingly embracing digital payment technologies, recognising their crucial role in driving business growth, according to a new report released by Visa.

The report, titled ‘Value of Acceptance: Understanding the Digital Payment Landscape in Kenya,’ paints a picture of a dynamic digital payments ecosystem ripe with opportunity.

A striking 84 per cent of surveyed SMEs acknowledge that investing in payment technologies is vital for expansion.

This positive sentiment is further underscored by the fact that 68 per cent of those already accepting digital payments plan to increase their investment in these technologies, including contactless solutions.

This surge in adoption is evident, with 40 per cent of SMEs having integrated digital payments into their operations within the past two years.

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Convenience (40 per cent), cost savings (38 per cent), and improved efficiency (37 per cent) are cited as the primary drivers behind this shift.

The report also highlights the significant potential for transitioning cash-only SMEs to digital platforms.

A substantial 56 per cent of these businesses report losing customers due to a lack of cash, while a staggering 91 per cent express concerns about cash-related security risks, such as robbery and employee embezzlement.

These challenges underscore the compelling advantages of secure, convenient, and transparent digital payment methods.

While cash remains a familiar option, the study reveals that card payments offer numerous benefits, including increased customer convenience, simplified accounting and sales management, an enhanced business reputation, valuable insights into spending habits, and support for multi-currency processing.

Despite the growing enthusiasm for digital solutions, security remains a key concern. Nearly all digitally enabled SMEs (97 per cent) still harbour anxieties about cash-related security, and even businesses already accepting digital payments are seeking enhanced security measures.

Specifically, 71 per cent are looking for secure B2B payment solutions, and 69 per cent desire guidance on payment security best practices.

This demand for robust security is juxtaposed with a high satisfaction rate (69 per cent) among SMEs currently using financial technology, further reinforcing the potential for continued expansion in the digital payments sector.

Visa East Africa Vice President and General Manager Chad Pollock noted that Kenya’s digital payments sector is expanding as more businesses embrace innovative payment methods and security-enhancing solutions.

“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,” he stated.

He added that this shift could contribute to economic development and personal financial prosperity, saying Visa aims to “unlock the full potential of digital payments for all Kenyans, spanning individuals, merchants, and businesses of all sizes.”

The report emphasises the multifaceted value of digital acceptance for SMEs.

Beyond boosting revenue by reaching a wider, increasingly cashless customer base and improving customer satisfaction through faster payments, digital payments also mitigate operational risks associated with cash handling.

Moreover, the digital transaction records provide valuable data that can facilitate access to financing, thereby stimulating further growth.

The broader economic implications of digital payment adoption are also significant.

It drives financial inclusion by connecting the unbanked to the formal financial system, opening up access to savings, credit, and insurance.

Research suggests that the transition to a digital economy can generate 1-2 per cent annual GDP growth, with even a small 1 per cent increase in card usage potentially generating an average $67 billion annual increase in goods and services consumption across 70 countries and territories.

Visa is committed to supporting Kenya’s transition to a more digital economy.

As a trusted advisor and partner, the company offers a range of solutions, including programs for specific merchant segments, innovations like Tap to Phone, Contactless Payments and Click to Pay, and educational resources for businesses about the advantages of digital payments.

The ‘Value of Acceptance: Understanding the Digital Payment Landscape in Kenya’ report, conducted by 4Sight Research & Analytics, surveyed 254 SME owners/managers in Kenya, focusing on their perspectives on digital payment acceptance.