Sheriff Shittu

e-commerce in Nigeria – The way forward
Posted: 12, Mar 2009 by Possicon

webpay_logo Looking at the Nigerian internet market, we see an emerging platform for growth and business development. Still, 10 million users is not too small for business to thrive but the result we see everywhere is less than 1% of Nigerian Websites offer online payment. That is to say 1 out every hundred Nigerian websites have online payment system.

etranzact_logo2Our banks e-payment system is dominated by the almighty Interswitch with etranzact making do with the crumbs. Every ATM card you see is powered by Interswitch and they currently operate with all the banks. The card which is internet, POS enable and ATM is majorly used for ATM and POS purchases despite its online capacity.

Online Payment

To get Interswitch payment system enabled on your website you will need to pay a whopping N150, 000 setup fee while etranzact on the other hand is N250, 000. This couple with various charges made on every purchase made on your website. 1.5% on every transaction below N133,333 and N2,000 flat on transaction above N133, 333.

If the setup cost is reduced to like N15, 000 I’m very sure the payment platform adoption will increase by 500%. Many startups need a payment system that will work in Nigeria environment but most don’t have N150, 000 to pay.

Also, it’s of high importance that we deal with the security bias of people towards online payment but I guess much education is needed in that area.

Business could be stimulated by easy payment system, most customers buy on impulses; sales will increase given easy means of payment. Well if there is an underwriting platform (supported by banks Like GTB’s idea) for website to have their setup fee spread over a period in installments that could also help.

If the payment is reduced to N15, 000 will you be willing to sign up immediate? What do you think?

Can you buy something online with your ATM Card?

  • On Some Sites (42.0%, 5 Votes)
  • Yes (33.0%, 4 Votes)
  • No (25.0%, 3 Votes)

Total Voters: 12

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Comments Comment(s) so far

  • noelite
    Elsewhere in the world, setting up online payment software are free. Returns are made from commissions on each transaction. Unfortunately, Operators in Nigeria start up on very greedy notes.

    Imagine, N150,000.00 - how will a small business owner cough this out?

    And when eventually he does, he gets to realize he just bought a piece of the disappointment because the providers have refused to be responsible.

    Interswitch's switch or payment gateway will 55% of the time have issues and refuse to process the payment and the small business owner who with unease payed for their license begins to loose sales and customer trust as a result.

    The most annoying part is that Interswitch, as a friend of mine rightly said, will flex muscles at every available opportunity.

    I don't blame them (too much money). Once upon a time people bought MTN SIM cards for as much as N60,000 and felt like 'bigger boys'. Perhaps that will happen with Interswitch when they get a good competitor.

    For now they got the market. We have to get thinking on a better future for eCommerce in Nigeria.
  • Possicon
    @Niyi
    They both way too high. I hope to see a price slash or a viable competitor to come on board.
  • N150,000 is an undisguised extortion. I shared my views on this matter about 2 years ago and it is pathetic that things have remained the same till date with the exception of GTB's model of slashing off 50%. N75,000 is still to high.
  • Possicon
    @Nairalist

    Interswitch?
  • I was once told that their commission is 40 naira per transaction.
  • Possicon
    @nairalist

    Think about it, the 150k is just for the setup while you will definitely pay other commissions, couple with your site (building and maintenance), offline shop (if any) etc.

    What I think again is;

    Interswitch should restructure their product to fit the trends, they should check for a possible high traffic site who has less money to start and sells small stuffs then he pays like 15k-30k while the rest would be met from the commision.

    That I think will increase the startup cost for everyone and the turnover will definitely be benefial to Interswitch.

    Well since they are still milking the ATM stuff they may not think about this yet.
  • Possicon
    I think there should be a link/page on classified ads where people can actually states any transaction they have been able to get through via the service.

    I still think that; for continuity and better relationship, a full e-commerce site can easily make more proposition to customer for further purchase.

    Classified could also be linked to an e-commerce site where you can easily track your hit for better planning.
  • Ecommerce and classifieds both have their roles.

    It's not always possible to the things one wants to buy in one's area, particularly if one does not live in Lagos.

    I don't think the 150k fee is as excessive as I used to think it was. It costs more than that just to rent a shop for an offline store!
  • The main purpose for encouraging the creation of more e-commerce sites is to help more sellers sell their stuff, and more buyers get their stuff. However, they are not the only solution.

    Online classifieds far outperform pure e-commerce sites in the sales of many categories of goods and services.

    Why go through the hassle of creating a full-fledge e-commerce site when you can very effortlessly sell your stuff on leading online classifieds. You get the extra advantage of actually getting to KNOW your customers, since deals are usually concluded hand-to-hand.

    I would say full e-commerce solutions work best for the large international companies. The small and medium enterprises better try out (free) online classifieds.

    I may be very biased; after all I own an online classifieds (Kerawa.com), but still…
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