Even though Uche (pseudonym) works with a tech company that provides electronic payment services in Nigeria, he is not keen on using e-payment channels when transacting business. His skepticism about e-payment goes beyond e-commerce – he said he thinks twice before even choosing to pay with the POS anytime he shops at Shoprite.

He told Appsafrica.com: “Maybe it’s because I get to see the high number of cases of electronic payment scams or the fact that I know how easy it is for those that with criminal intentions to get credit card details and use such easily without getting caught.”

Or he’s just being ridiculous?

There are several other tech enthusiasts that are really passionate about technology but when it comes to electronic payment, they become reluctant to embrace the system. While many of the skeptics are just being overprotective of their money (and credit status), some of them have valid reasons to be justified, stemming from previous instances of when technology failed. Okon Akinbode, an undergraduate schooling at the University of Lagos is one of such.

In his second year at the university, he had an experience with electronic payment that changed his perception about technology, financial institutions in the country and electronic payment as a medium.

“On a particular Friday afternoon, I went to the branch of my bank (FirstBank of Nigeria) that is closest to my school to use the ATM machine to withdraw some money that would be used to offset my outstanding school fee. I punched everything correctly but it refused to pay me even though it went ahead to debit me. It took the bank two months to rectify the error. By that time registration had closed and I had to pay additional late registration fee. I was just lucky not to have spent an extra session because of that. At home, everyone asked me why I didn’t just walk in to the banking hall and collect the money from the teller. Since then I’ve decided not to trust technology again,” he said.

Several other citizens have similar stories. While some were able to have their cases resolved by the banks, a good number of such cases become infinitely escalated with no results or refunds.

There are also the activities of fraudsters which are occurring at a high frequency rate now as revealed in the 19-page latest report on Nigeria’s e-payment fraud landscape. And with the non-existence of a law on electronic fraud, individuals are largely on their own when it comes to getting protection against fraud since no one wants to be held liable – not the bank, nor the merchant. Since no one wants to assure the customer that he or she will not lose anything for trusting electronic payment, the electronic channels become unattractive to customers. The online merchants and others offering paid services are often the ones that suffer mostly.

In the early days of ecommerce in Nigeria, the two leading platforms, Jumia and Konga, experimented with electronic payment but they did not record appreciable results. Their major break for them came when they bought decided to introduce pay-on-delivery feature that allows online shoppers to order goods and only pay for such at the point of delivery.

In a recent interview with Appsafrica.com Evangeline Wiles, Managing Director of Kaymu Nigeria shared how cash is still king and Nigerian buyers like paying cash. Wiles stated that “80-90% of payments are cash on delivery, buyers like that and it gives them trust in the system”. Kaymu also offer escrow accounts for customers, offering a trusted intermediary for both parties which overcomes some of the barriers in a new online world.

[youtube https://www.youtube.com/watch?v=zOVp0PeTZLQ&w=420&h=315]

 

But not every online company can implement pay-on-delivery due to the nature of their services. One of such is MoboFree, Africa-based mobile marketplace with a social twist that allows people to buy, sell and swap products with other trusted people.

In a chat with Appsafrica.com, Cristobal Alonso, Chairman of the board at MoboFree admitted that electronic payment is the major challenge that tech companies operating in Nigeria are coping with. According to him, monetization of MoboFree and other online-based platforms would become much more easily achievable when Nigeria has an effective electronic payment system, – although he added that the system could take a couple of years to complete.

Paga payments has had some traction with about 2 million customers to date and should be commended for pushing the mobile payments agenda back in 2009 long before the major banks such as Access Bank had even recognised this channel in Nigeria.

“The payment is the biggest hurdle but it would be solved because the banks are trying to go cashless because it is good for them and it is good for the users at the end of the day. More and more businesses will see the value,” he told AppsAfrica. “But this is not a six-month issue; we are talking about 3 – 5 years. [But] we will go along with that. As the acceptance of cashless electronic payment continues, we will get more services along the way.”