The Nigerian government is pushing a policy which stipulates that daily bank cash withdrawals exceeding N500,000 (about $3,000) for individuals and N3,000,000 ($18,000) for corporate bodies should be charged a ‘cash handling’ fee. The new cash policy seeks to reduce the amount of notes circulating in the market and encourage adoption of electronic transactions.

Last year biochemistry graduate Simeon Ononobi started SimplePay, a web and mobile-based wallet that enables users to pay for services such as mobile recharges, federal taxes, church contributions and school fees.

Dinfin Mulupi spoke to the Nigerian entrepreneur and SimplePay director of operations Richard Tanksley about their experiences running an e-payment platform in a country where people love the “flash of cash”.

What inspired you to start SimplePay?

Ononobi: I had issues with starting up my own e-commerce store as payment was a problem. I then realised it was the same for many others so decided to pursue this as a business venture. The market opportunity is huge in Nigeria because we have a bigger population than the number of customers PayPal has in over 100 countries.

Tanksley: There are 174m people in Nigeria and an estimated 25m smartphones. This sector is experiencing explosive growth due to the rapidly falling price for decent phones. Nigerians with smartphones are our target market. A portion of that target is people who hate waiting in line at the bank (which is all of them). Cash is dirty, dangerous, bulky, and there is never an ATM when you need it. We solve these problems.

Describe the market reaction since you launched.

Ononobi: It has been great. Online payments have always been a big issue in this market. So a solution that is secure, convenient and well-priced is quite attractive to users. In just about a year we have 10,000 registered users and over 30,000 unregistered users. Our customers are people who need to collect payments. A lot of them are also merchants who want to make sure that they get paid using a secure service that has fewer ‘charge backs’.

Explain some of the challenges of running the business.

Tanksley: We are trying to change attitudes. That’s not easy because people love cash in Nigeria. We have to convince them the convenience of SimplePay is worth more than the flash of cash.

Ononobi: We face loads of challenges, ranging from usage and acceptability of the product by users, to having to pay for everything. Power has also been a great hindrance to growth as we use a generator which is costly. Additionally, hiring the best hands and being able to pay for that talent has also been difficult. But generally, we have learnt to cope with the demands of doing business in Nigeria.

Swiss venture Seedstars has invested about $300,000 in the company for a minority stake. Tell us about the investment process.

Ononobi: We took part in a competition for start-ups which we won at the local level. We then went to Geneva for the global round of the competitions to represent Nigeria, emerged second and got the funding. The negotiation process was long but not difficult because the relationship was based on mutual respect and trust. They were attracted to SimplePay because it is a viable business set in a fast-growing economy.

Any mistakes made along the way?

Tanksley: We should have cut costs sooner. All start-ups start spending more money than they make. The goal is to get to cash flow positive. You can do that by cutting costs and raising revenue. We should have cut costs sooner so that our runway (time before the funding runs out) is longer.

Ononobi: I have made lots of mistakes but I have also learnt a lot. One, in the early days, was to try to do everything. The result was I actually reduced my output at work. One particular situation that comes to mind was trying to do accounting when I don’t even know the basics of accounting! To solve this I tried to get the best accounting option for the cheapest cost to the company. I have since learnt to focus on my strengths and get help where I need it. It has been a great learning curve for me.