Africa Payments

Massive consumer boom in Africa

As the Internet becomes more and more accessible, affordable and faster in countries like South Africa, Kenya, Nigeria, e-commerce is ready to take off.

Fragmented payment methods on the continent

More importantly, the market in Africa continent is rather fragmented in terms of payment methods preferred by locals. For example, M-Pesa (mobile-phone based money transfer and micro-financing service) is wildly popular in Kenya, Tanzania and Uganda, where there are more mobile money accounts than bank accounts. But it’s never taken off in South Africa and is not even a blip on the radar in Nigeria. The Nigerian payment method of choice is the Interswitch Verve card issued through 16 of the country’s major banks. There are over 10 million Verve cards active in Nigeria, far outnumbering MasterCard and Visa credit cards. Card payment systems are more vulnerable, which means merchants need extra protection. In the case of MasterCard and Visa, one has the option of using 3-D Secure, which is not available for Verve cards, but merchants can take other steps to protect themselves.

Internet sales flourish in Africa

Online shopping is a global consumer trend, and it is anticipated that affordable tablets and smartphones will accelerate the use of services in markets where increasing number of customers start to get support from fast developing infrastructure.

In Kenya, this East African nation of 43 million people, almost anyone you meet has used a phone to make a transaction. With about 10 million people having access to the Internet in Kenya and over 90% of the population has a phone (up from just 3% in 1999) and 96% of mobile phone users has used a handset to make a mobile payment or for m-banking. Kenyans use their phones to pay electric bills, taxi fares, get cash or even buy products and other essentials in rural markets. Kenya may be ahead of the curve, but it is far from alone.

From the inception of e-tailing in 2004, South Africa online retail market has been growing on a trajectory of 34% CAGR (Compounded Annual Growth Rate) according to a research study accredited by Gordon Institute of Business Studies (GIBS). While South Africa is ahead of some of other countries on the continent in terms of online sales volume‚ the e-commerce market is still far from mature but growing rapidly‚ said Brendan Peo‚ chief operating officer at Vaimo (a leading supplier of Magento, delivers multi-channel responsive e-commerce solutions to merchants around the world).

In Nigeria, this western coast country of 160m people, with Internet usage growing fast, Amazon-style websites such as Konga and Jumia are already fulfilling close to a thousand orders nationwide each day six months after their launch. By offering everything from underpants to iPads, and allowing customers to pay cash on delivery, the start-ups – and the foreign investors who have snapped up stakes in them – believe they can capture a significant portion of the consumer market. Nigeria’s infrastructure challenges and lack of high quality brick-and-mortar stores also helped its e-tailing market growth. While several Western-style shopping centers have opened across the country in recent years, the high cost and scarcity of suitable land in densely-packed cities such as Lagos has curtailed the growth of traditional retail industry but helped the growth of e-tailing industry.

Behavior patterns of online shoppers from Africa

For the most part, consumers are using e-commerce to purchase digital or non-shippable goods such as computer software, downloadable music and movies, airline tickets, and reservations. The relatively low online purchasing in physical goods means there is even bigger potential for further increase in this segment. Additionally, a study published recently by MasterCard showed that 91% of South Africans who shop online are happy with their overall experience‚ a four percentage point increase from the 87% who said the same thing in last year’s survey.

As African economies such as Nigeria’s have taken off, consumers and an emerging middle class have become increasingly important parts of the continent’s growth story. And, much like their peers in the developed world, that middle class is now going online to shop.

The bottom line is that any company thinking of doing e-commerce in Africa needs to research its market very carefully and need to find a skilled and experienced payment services provider. Now international merchants with eye on emerging African online shoppers have possibility to solve the fragmentation issue with our one-stop solution, the African Payments provided by Payment 21®.

Ease of Use with Low cost

Payment 21® understands that merchants want clear and effective simple management tools to control costs with no hidden fees and easy yet quick access to revenue from anywhere and at any time. With our unique solution, once a merchant opened an account with Payment 21®, we are able to immediately connect you with African customers and take advantages of early movement. Additionally, our solution also has the following advantages:

• Receive payments instantly and managing your account in real time.
• No requirement to open an entity in Africa.
• One stop solution for a continent with fragmented payment methods
• Enable merchants to process Nigerian Naira (NGN), Kenyan Shilling (KES), South African Rand (ZAR) and Egyptian Pound (EGP) payments, settlements in USD, Euro (EUR), Swiss Francs (CHF) and British Pounds (GBP).
• No currency conversion issues, shoppers and your business interact seamlessly.
• No third parties involved in the transaction, significantly lowered fees.
• Anti-fraud system protects you from fraudulent transactions.

Payment21® welcomes all types of merchants, no matter you are an independent designer or a giant corporate.

Request for more information about Africa Payments here.

Financial Times

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