Retail indaba getting paid securely online 2013.08

Getting Paid Online in AfricaJune 2013

Africa: the retail growth story of the next decade

Africa: the retail growth story of the next decade

Barclays Retailer Survey . .

• See Africa as the retail growth story of the next decade• Rapidly expanding middle class, mobile connected consumers• First mover advantage the most important consideration• Online was their preferred route to market for a third

Africa: the retail growth story of the next decade

Visa Integration Index Research . .

• African economy has just experienced its best growth decade on record• At 5% growth per annum since 2000 has outpaced global growth• Six of the world’s ten fastest-growing economies between 2001 and 2010

were African• Highest rate of return on investment of any region in the world• Increasingly urbanised population = booming consumer markets• 900 million mobile phones by 2015 = 85 percent penetration

Africa: the retail growth story of the next decade

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PayGate product offeringMobile Connections Penetration Rate

http://www.roycefunds.com/insights/

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PayGate product offeringSmartphone penetration

www.elearning-africa.com

2012 African country % Smartphone Penetration 1. Egypt 37%

2. South Africa 19%

3. Tanzania 13%

4. Kenya 12%

5. Nigeria 12%

6. Ghana 10%

Smartphone penetration is currently low, but it is growing rapidly – reports are that it is growing at over 40% per annum

Growth of digital driving behavior

Growth of digital driving behavior

In some countries in Africa there are more people with mobile

phones than there are with electricity

Growth of digital driving behavior

2011 2012

400%growth in

mobile internet usage

Growth of digital driving behavior

81%

Browse the internet

77%

Used a search engine

48%

Watched a video63%

Connected to social networks

IN 1 WEEK

Challenges . .

• For online retail performance there is a lot to consider . . • Nature of product or service which will affect . . • Delivery and logistics . . .• Whilst leapfrogging in mobile and innovative technology . . • Infrastructure is lagging.• Getting paid is not always that easy either . . for eg Congo is cash only• Got to carefully manage your risk and return . .

Internet as a channel to wake up retail revenues and profitability

Opportunities . .

• Growth in connectivity and increasing ability to get paid . . • Airlines opening up ways to get paid by locals online . . • eGovernment drive opening up ecommerce and payment . . • Lotto and online gambling opening up mCommerce . . • Trading and bill presentation is currently mainly internet . . • Payment is a combination of mobile and internet . . • Great examples of mobile bill payment like M-Pesa in Kenya . . • Consumers often more payment ready than the businesses . .

Internet as a channel to wake up retail revenues and profitability

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PayGate product offeringInternet Users

http://www.roycefunds.com/insights/

It’s horses for courses . .

• We need to stop thinking “Africa” and start talking individual countries . . • Each country has a unique payment dynamic . . • Each one needs its own online payment strategy . . • For example

• Congo is about cash . . • Nigeria is about Verve debit cards . . • Kenya is about M-Pesa . . • Tanzania is about private label and their M-Pesa off a low base . .

• Logistics are different in each . . ability to get a product delivered . . • Delivery is not easy in Kenya . . • Yet Nigeria it’s happening and the courier will collect cash for you . .

Physical products are still a hard starter in many countries . . digital downloads and software is where its at right now

Online payment options

Traditional entry point for a soft landing . .

• Traditional acquiring ie MasterCard and Visa is nice and easy . . • But not that big . . • Visa & MasterCard fast-tracking private label cards onto their networks . .• MasterCard converted 5m private label cards in one country . .• That’s 5m more locals who can soon buy online . . • Alternative is bigger than traditional . . • But not the same in each country . . and not as easy to bring online

Online payment options

Your merchant account(s) . .

• Do you have a legal entity needed for a merchant account etc . . • Own merchant account or use an aggregator . . • Banks prefer aggregator in many countries . . • Banks very risk averse . . paranoid about chargebacks• Make sure there is safe storage of cards . . PCI compliance• Currencies . . .

• USD is accepted in most countries . . • Local currency also available . .

• Banks not that fussy around cross border acquiring . . • Banks are represented in a number of countries, • BUT not always ecommerce licenced or can trade in the currency . .

Online payment options

Countries and payment methods . .

• SA . . PayD, Ukash, FNB Cell PayPoint, SID• Easy countries from a MasterCard and Visa acquiring perspective . . Kenya,

Nigeria, Mozambique, Botswana, Uganda, Namibia . . • Nigeria . . Verve debit cards are a must . . Can be confusing for merchants• Kenya . . . M-Pesa has 16m users and is the most popular method. . • 3D secure is popular . . risk averse• In some countries cards blocked for online . .• President or leaders are involved and driving it . . Rwanda, Kenya, Ghana• Countries like Congo and Togo its cash only . . nothing is happening• Big mobile payment methods like M-Pesa and Orange• Barclays, Stanbic . . establishing a good footprint . . easier to work with• Cost of processing is generally higher than SA . . • Sometimes they will retain funds for an extraordinary time • Becoming a more rational market with understanding and competition . .

Online payment options

Make it easy for your customer . .

• Use Ajax . . keep them on the same page . . • PayWeb (stackable payment options) vs PayXML (upgrade) . . • Go for one integration, many payment methods . . • PCI is not negotiable . . • Choose the payment solutions to suit you product and business . . • Offer the appropriate ways to pay . . • Mobile options . . • More tips from IT . .

A smooth and secure checkout

Successes and failures . .

• Poor fraud management . . • Not providing the appropriate payment methods . . • Choosing unsuitable alternative payment methods . . • Language problems . .• Misled by wannabe gateways . . • Loss of trust and confidence at the checkout . . • Handing over too much responsibility for managing merchant account . . • Timing . . doing business in these countries takes time . .• Use tried and tested solutions that you are familiar with . . • With people you know and trust to get you sorted . . • New product, new market is risky . . so go with what and who you know . .

Successes and failures . .

Thank you

Robin Philip

www.paygate.co.za