Online Utility Bill Payment in Nigeria: Closing the Inequality and Financial Inclusion Gap.

This blog post explores how online utility bill payment is pivotal in closing the inequality gap and promoting financial inclusion in Nigeria.

Making payments online in Nigeria has come a long way.

Our economy has grown from the times sellers insisted on only cash payments because of a lack of trust in online payment systems and customers insisting on going to a physical DSTV office to pay their cable TV bill because they’re scared of the long back and forth that may occur with the provider if their online utility bill payment is unsuccessful. Now, customers find it effortless to pay electricity bills online, or buy airtime and data right from the comfort of their phones or PCs.

The adoption rate of online bill payment platforms in Nigeria has been steadily increasing, and there has been a significant surge in the number of users embracing digital payment channels for settling their utility bills. According to recent statistics from the Nigeria Inter-Bank Settlement System, in 2022, the total spend on e-bills such as electricity, TV and other utility bill payments rose by N576.41bn. year-on-year.

The data disclosed that N2.63tn was spent on e-bills from January 2022 to November 2022, a 28.14% increase from the N2.05tn spent in 2021.  This trend can be attributed to these platforms' ease of use, convenience, and time savings. Users appreciate making payments at their convenience, avoiding the hassles of traditional payment methods.

Financial inclusion and reducing inequality are vital aspects of Nigeria's socioeconomic development. This article explores how online utility bill payment is pivotal in closing the inequality gap and promoting financial inclusion in Nigeria.

What is Online Utility Bill Payment?

Online utility bill payment is an electronic payment service offered by many banks, fintech companies and bill-pay services. It involves paying bills for essential services such as electricity, cable TV and telecommunications through digital platforms—often at no extra cost. This method offers several benefits for consumers.

In Nigeria, online bill payments are facilitated by NIBBS e-BillsPay, an electronic bill payment platform that facilitates the payment of bills, fees, levies, premiums, subscriptions, etc., through electronic payment channels. Internet banking apps, digital financial institutions and online bill pay services then plug into the e-billspay platform to offer electronic bill payment as a service to the public.

Apart from the convenience and safety that paying for your bills online brings, there is also a significant number of economic benefits, including mobilising savings and ensuring that most of the cash available in the country is with financial institutions. This will make more funds available to both business and individual borrowers.

How to Pay your Utility Bills Online

If you’re thinking of how to buy electricity online, pay for prepaid meters online in Nigeria, or buy airtime online, online bill payment is easier than ever before.

Simply visit a trusted provider’s website and provide the details requested -some providers require that you create an account with them. Overall, when you’re paying your bills online, ensure you’re visiting a safe utility bill payment provider so as not to fall victim to payment scams.

Understanding the Challenge

Traditionally, paying bills in Nigeria involved visiting physical offices or designated payment centres, leading to long queues and wasted time. Additionally, limited working hours made it challenging for many people to find a suitable time for bill payment.

Recognizing these challenges, online utility bill payment emerged as an innovative solution that simplifies the entire process. It provides convenience and saves time by allowing individuals to pay their bills online from the comfort of their homes or through mobile devices. This convenience is particularly important for underserved communities facing difficulty physically accessing payment centres or banks.

Online Utility Bill Payment in Nigeria: Current Landscape

In recent years, the Nigerian government has placed a strong emphasis on digitalization and financial inclusion, leading to significant advancements in online payment systems.

Several reputable online platforms, and payment companies, have emerged, allowing Nigerians to pay electricity bills anytime and anywhere conveniently. These platforms are accessible through websites and mobile applications, providing users with user-friendly interfaces and secure payment gateways.

Online utility payment in Nigeria is increasingly gaining adoption as more financial institutions can build trust and meet customers exactly where they are. A recent survey by Mastercard disclosed consumers are now more open to using mobile money for more than just transactions— they are paying bills and buying products using mobile money.

Notable is the rise of embedded finance and payments infrastructure companies that provide other companies with the APIs, no-code tools and legal compliance needed to embed financial services like bill payments into their service offering.

By providing these services, these bigger players help smaller B2C payment companies build a stellar business offering instead of focusing on the laborious code development and license financing plaguing FinTechs.

Closing the Inequality and Financial Inclusion Gap Through Online Utility Bill Payment

Nigeria faces significant inequality. Many underprivileged communities lack access to basic financial services due to low levels of digital literacy among the uneducated populace, non-existent internet access in last-mile locations, limited banking infrastructure and high transaction costs.

However, online utility bill payment in Nigeria has emerged as a powerful tool and has proven to be a catalyst in addressing the inequality gap in Nigeria and promoting financial inclusion. Financial inclusion is crucial in reducing inequality as it empowers individuals and communities by providing them with the necessary tools and resources for economic participation and upward mobility.

Here are a few ways paying bills online is catalysing financial inclusion in Nigeria:

  1. It provides convenience and saves time by allowing individuals to pay their bills online from the comfort of their homes or through mobile devices.

    Traditional payment methods, such as cash payments and physical bank visits, can be challenging for individuals in remote areas, underserved communities or those without easy access to banking services.

    By providing a digital payment infrastructure, online platforms bridge this gap, empowering underserved communities and facilitating their participation in the formal financial system and allowing a wider range of people to participate in the digital economy.

    It empowers individuals who previously faced barriers in accessing bill payment services, as they can now conveniently settle their utility bills, ensuring continued access to essential services.
  2. Online bill payment is reducing transaction costs.
    Traditional payment methods often involve additional charges, such as transportation costs or fees imposed by intermediaries.

    By eliminating these intermediaries and allowing direct online payments, individuals save money and allocate their resources more efficiently.
  3. Online bill payment is enhancing transparency and accountability.
    Digital platforms provide clear and itemized billing statements, allowing consumers to track and verify their utility expenses. This transparency helps build trust between service providers and consumers, reducing the risk of fraud or disputes.

    Individuals who previously relied on informal and cash-based transactions now have the opportunity to establish a transaction history, potentially improving their access to credit and financial services. The ability to make timely bill payments also helps build a positive credit profile, opening doors to broader financial opportunities.
  4. Addressing Payment Challenges.
    Bills are delivered electronically, eliminating the need for physical copies, and payments are processed in real-time, reducing delays and ensuring timely bill settlements. People no longer have to leave the comfort of their homes to pay bills, reducing the apathy to payment and strengthening revenues.
  5. Encouraging Revenue Collection and Sustainable Development.
    For electricity distribution companies like IKEDC, PHEC etc, efficient revenue collection is crucial for sustaining operations and investing in infrastructure development. Adopting online electricity bill payment platforms has facilitated more streamlined revenue collection processes.

    By offering consumers convenient payment options, these platforms have contributed to increased collection rates, reducing revenue losses and enabling companies to invest in improving the quality and reliability of electricity supply.

The Future of Utility Bill Payments: Overcoming Challenges and Expanding Online Bill Payment Adoption

While progress has been made in promoting online utility bill payment, several challenges remain.

Low digital literacy levels, especially among marginalized communities, continue to pose a significant obstacle to widespread adoption. Addressing this challenge requires comprehensive strategies, including investment in digital literacy programs, training workshops, and public awareness campaigns. By enhancing digital skills, individuals can confidently navigate online bill payment platforms and embrace digital financial services.

Inadequate internet infrastructure, particularly in rural areas, limits access to online bill payment services. Collaborative efforts between government agencies and telecommunications providers are essential to expanding internet connectivity to underserved regions. Investment in infrastructure development, such as improving broadband coverage and expanding mobile network reach, is crucial to ensure that online bill payment services reach even the most remote areas.

Image credit: Do4Africa

While online electricity bill payment and airtime bill payment platforms offer numerous benefits, it is essential to promote awareness and educate consumers about their availability and usage.

Continued efforts and investments are required to build a more inclusive and equitable financial ecosystem in Nigeria. As Nigeria continues to embrace digitalization, online electricity bill payment platforms will undoubtedly play a crucial role in shaping a more connected, efficient, and sustainable financial ecosystem.

Toluwanimi Olubanke