- Rose-Marie Bouboutou-Poos
- broadcast journalist
African e-commerce players are neglected by the major payment platforms and are faced with a difficulty: collecting their payments, but entrepreneurs have developed solutions. We present two of them in this article.
With the Covid 19 pandemic and social distancing, more and more people are shopping online.
Sales, promotions, holidays like Valentine’s Day, everything is organized by e-merchants to get us to pull out our bank card.
Now imagine having made juicy deals with multiple sales to your credit, tens of thousands of electronically received CFA francs that show up positive on your e-commerce account, but no way to cash them in your bank account or touch them in cash.
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This is the puzzle facing Valeska Tozo, an e-commerce entrepreneur based in Togo. She explains the difficulties of many actors:
“We are obliged to limit ourselves to the local means that we have at our disposal like Orange Money or Wave for example in Senegal that facilitates the payment. In Togo we have Flooz or T-Money but sometimes the connection does not go through and we cannot receive payments from the outside”.
For your international customers, who can still pay by credit card or PayPal, this is yet another headache.
“I have a Paypal account but sometimes we have difficulty withdrawing money and other means of payment, whether Stripe or others, in fact they do not allow us to cover several countries so we have to resort to transfer agencies”, he explains.
“This has a big impact on business because most people abroad have bank cards and use Paypal, so it’s easier for them to pay online than to queue to send a money transfer. make the purchase”, laments Valeska Tozo.
a great potential
E-commerce is often touted as the way of the future.
Online retail in Africa has grown exponentially in recent years. Several factors contribute to this growth: the youngest population and the second largest in the world. Furthermore, Internet penetration has increased due to the widespread expansion of smartphones and mobile devices. This trend, reinforced by the pandemic, is expected to continue.
According to the e-Conomy Africa 2020 report by Google and the International Finance Corporation (IFC), the digital economy in Africa could represent 5.2% of the continent’s GDP by 2025, or just over US$180 billion. This figure could reach $712 billion 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 participants in Africa.
But if digital payments are increasingly widespread in Africa, e-commerce entrepreneurs in some countries on the continent, neglected by the major payment platforms, are faced with a real difficulty unsuspected by many customers: remote collection of their customers .
Solution 1: Online banking
Luc Tolo Beavogui, a Guinean businessman based in Senegal, 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 get involved with digital. Most people in Africa cannot have Stripe (a credit card payment platform, editor’s note) and the accounts of the PayPal are limited to just being able to pay online, but not receive money and do business with it”, he explains.
This blockade led him to do in-depth research to develop “his recipe”, as he says, which he now benefits other African e-traders from.
He found online banks like Payoneer and TransferWise that African entrepreneurs can use to affiliate with the two online payment giants Stripe and PayPal.
“These platforms accept all banks in Africa and suddenly it is possible to link your bank account to the main payment platforms. This is not an illegal breach”, explains Luc Tolo Beavogui.
Today, its Vamnom framework helps online merchants set up payment methods.
Solution 2: African payment platforms
Idriss Marcial Monthe co-founded CinetPay. The idea germinated in 2009 when the entrepreneur decided to create a website in Ivory Coast selling African domain names and hosting spaces.
“I was very quickly faced with the problem of being able to accept payments online. I had to move to go to customers to withdraw money. The cost of transport consumed all my margin”, recalls the businessman.
He successively opens 3 PayPal accounts with addresses of friends or relatives residing in the West (France, Canada, Switzerland), but every time the accounts are closed by PayPal after a few months.
“Since you are an African company, operating in Africa and using an account that was opened in Europe, you are not entitled 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 operators to get their payment APIs.
“API” means Application Programming Interface. A Payment API is an API specially designed to communicate information to banks to allow payments to be made securely on a website.
This is the missing ingredient for success in your business.
“We were able to convert 80% of our users with online payment”, he says.
“We realized that what we had developed as a solution to solve a problem we had was a business idea and we decided to create cinetpay, a payment aggregator to allow anyone who trades online to accept any type of solution through our platform”, he explains. Idriss Martial Monthe.
CinetPay is now present in 8 French speaking African countries (Côte d’Ivoire, Senegal, Mali, Togo, Burkina Faso, Guinea Conakry, Cameroon, DR Congo) and the company has more than 7000 companies in its database.
Many other platforms are present in this market SycaPay, PayDunya, Touch Pay, Wizall Money or Bizao which have the particularity of being all based in Ivory Coast.
Why are major payment platforms not accessible in Africa?
We reached out to Stripe to find out why they weren’t open to entrepreneurs from French-speaking Africa. The platform told us that they recently acquired Nigeria-based Paystack to lead their efforts in Africa, including Nigeria, Ghana and South Africa.
PayPal and 2CheckOut (the 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 refractory to Africa.
“Regulations in many African countries are not clear and legible enough for payment players who are used to being in highly regulated environments. The second reason is fraud because our countries are known to be countries where the level of fraud is the highest of the world The third reason is the risk that our different states pose due to political instability, lack of transparency etc. The last reason could be the opportunity: is it big enough for them to position themselves in the territory?
African platforms, African solutions to African problems, are a step in the right direction, although Luc Tolo Beavogui of Vamnom laments that none covers all countries.
“There are only a few countries on it, there are no English-speaking countries, you have this means of payment, but it is always limited. Imagine having 3 or more payment interfaces on your website to cover all countries that are not pretty”, he said he.
For diaspora entrepreneurs who intend to use them to cover African clients, access to these platforms is also reserved for structures registered in the UEMOA space.
The dream of the World Wide Web, the big village without borders, is therefore still not a reality for today in the field of e-commerce.