- Rose-Marie Bouboutou-Poos
- Broadcast Journalist
African e-commerce players are neglecting the main payment platforms and facing difficulties: collecting their payments, but entrepreneurs have developed solutions. In this article, we present two of them.
With the Covid 19 pandemic and social distancing, more and more of us are making some of our purchases online.
Bargains, promotions, holidays like Valentine’s Day, are all set up by e-merchants to get us to take out a bank card.
Now imagine that you have made a juicy deal with a few sales on your credit, tens of thousands of CFA francs received electronically that look positive in your e-commerce account, but there is no way to cash them in your bank account or touch cash.
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This is a riddle faced by Valeska Tozo, an e-commerce entrepreneur from Togo. She explains the difficulties of many actors:
“We are forced to limit ourselves to local funds that we have at our disposal, such as Orange Money or Wave in Senegal, which makes it easier to pay. We have Flooz or T-Money in Togo, but sometimes the connection doesn’t work and we can’t accept payments from abroad.” .
For his international clients, who can still pay by credit card or PayPal, this is another headache.
“I have a Paypal account, but sometimes we have difficulty withdrawing money and other means of payment, whether Stripe or some other, don’t actually allow us to cover several countries so we have to rely on transfer agencies,” she explains.
“This has a big impact on business because most people who are abroad have bank cards and use Paypal, so it’s easier for them to pay online than to get in line to send a money transfer. , discourages customers from ordering or making purchases, ”laments Valeska Tozo.
E-commerce is often presented as the way of the future.
Online retail in Africa has grown exponentially in recent years. Several factors contribute to this growth: the youngest and the second largest population in the world. Also, internet penetration has increased due to the widespread expansion of smartphones and mobile devices. This trend, further exacerbated by the pandemic, is expected to continue.
According to an e-Conomy Africa 2020 report by Google and the International Finance Corporation (IFC), Africa’s digital economy could account for 5.2% of the continent’s GDP by 2025, or just over $ 180 billion. This amount could reach 712 billion dollars by 2050. So, there is potential for a large digital market.
And many of these entrepreneurs are actually women entrepreneurs. According to the IFC, women make up half of e-commerce players in Africa.
But as digital payments become more prevalent in Africa, e-commerce entrepreneurs in some countries on the continent, neglected by major payment platforms, face a real difficulty that many users are unaware of: collecting their customers’ distance payments.
Solution 1: Online banking
Luc Tolo Beavogui, a Senegalese-based Guinean entrepreneur, founder of Vamnom, a digital marketing agency, also experienced these limitations when he started e-commerce.
In reality, this is the first difficulty for most people who deal with digital. Most people in Africa cannot have a Stripe (credit card payment platform, editor’s note) and PayPal accounts are limited to the ability to pay online but not receive money and doing business with it, ”he explains.
This blockade prompted him to conduct in-depth research to develop “his own recipe,” as he puts it, which he now benefits from other African e-commerce.
He discovered online banks such as Payoneer and TransferWise that African entrepreneurs can use to connect with two great online payments Stripe and PayPal.
“These platforms are accepted by all banks in Africa and it is possible to connect your bank account to the main payment platforms at once. This is not an illegal hole,” explains Luc Tolo Beavogui.
Today, its Vamnom structure helps online merchants set up means of payment.
Solution 2: African payment platforms
Idriss Marcial Monthe is the co-founder of CinetPay. The idea sprouted in 2009 when an entrepreneur decided to create a website in Ivory Coast that sells African domain names and hosting spaces.
“Very quickly, I faced the problem of accepting payments via the Internet. I had to travel to go to customers to pick up cash. Transportation costs ate up all my margins,” the entrepreneur recalls.
He opens 3 PayPal accounts in succession with the addresses of friends or relatives living in the West (France, Canada, Switzerland), but each time PayPal closes the accounts after a few months.
“Because you are an African company, operating in Africa and using an account opened in Europe, you have no right because PayPal is not authorized in your country. And every time PayPal closed our account, it blocked our money,” recalls Idriss Marcial Monthe.
Tired, he goes with his partner to Mobile Money to get their payment APIs.
“API” stands for Application Programming Interface. The Payment API is an API specifically designed to convey information to banks to enable secure payment on a website.
It’s an ingredient of success that his business lacked.
“We managed to convert 80% of our users online by paying,” he says.
“We realized that what we developed was a solution to a problem we had a business idea and we decided to make cinetpay, a payment aggregator that will allow anyone trading online to accept any type of solution through our platform,” explains Idriss Marcial Monthe.
CinetPay is now present in 8 French-speaking African countries (Ivory Coast, Senegal, Mali, Togo, Burkina Faso, Guinea Conakry, Cameroon, DR Congo) and the company has more than 7,000 companies in its database.
There are many other platforms in this market, SycaPay, PayDunya, Touch Pay, Wizall Money or Bizao, which have the special feature of being located in Ivory Coast.
Why are major payment platforms not available in Africa?
We contacted Stripe to find out why they are not open to French-speaking African entrepreneurs. The platform told us that they recently bought Paystack based in Nigeria to lead their efforts in Africa, including Nigeria, Ghana and South Africa.
PayPal and 2CheckOut (a payment solution for Shopify and WordPress) did not respond to our requests for comment.
For Idriss Marcial Monthe, there are several reasons why these platforms are resistant to Africa.
“Regulations in many African countries are not clear and legible enough for pay players accustomed to being in highly regulated environments. The second reason is fraud because our countries are known for being the countries with the highest fraud rates in the world. The third reason is the risk posed by our different states due to political instability, lack of transparency, etc. The last reason could be the opportunity: is it large enough to be deployed in the territory?
African platforms, African solutions to African problems, are a step in the right direction even if Luc Tolo Beavogui of Vamnom regrets that none covers all countries.
There are only a few countries in it, there are no English-speaking countries, you have this method of payment, but you are always limited. Imagine you have 3 or more payment interfaces on your website to cover all countries that are not “not nice”, he said. .
For entrepreneurs from the diaspora who want to use them to cover African customers, access to these platforms is also reserved for structures registered in the WAEMU area.
The dream of the World Wide Web, a large village without borders, therefore, is still not a reality for e-commerce today.