Africa is the flavour of the month for global companies wanting to expand their footprint in emerging markets, but, says Peter Harvey of PayGate, some operators have a lot to learn about what works in each country.
Any company which “tries to do e-commerce in Africa offering only global payment methods is setting itself up for failure”, says Harvey. “Africa is characterised by huge diversity in payment methods and preferences, which means every region or country needs to be approached as a distinct market.”
For example, says Harvey, “M-Pesa is wildly popular in Kenya, 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, he says, is the Interswitch Verve card issued through 16 of the country’s major banks. “There are over 10m Verve cards active in Nigeria, far outnumbering Mastercard and Visa credit cards. Those have a definite presence in the country and will continue to grow, but anybody selling into the Nigerian market who doesn’t take Verve payments is going to struggle.”
Africa’s diverse payment methods also come with different risk profiles for merchants, adds Harvey. “We find some merchants are wary of M-Pesa, for example, because mobile money is such a new thing. But in fact, because it’s a direct cash transfer system it’s incredibly safe for merchants – I haven’t yet heard of a way to defraud someone using M-Pesa.”
Card payment systems are more vulnerable, which means merchants need extra protection. “In the case of Mastercard and Visa you have the option of using 3-D Secure; that’s not available for Verve cards, but there are other steps you can take as a merchant to protect yourself.”
The bottom line, says Harvey, “is that any company thinking of doing e-commerce in Africa needs to research its market very carefully. Assume you will need a different approach for each country, and find a skilled and experienced local payment services provider to advise you.”