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Tuesday, 02 July 2013 13:36

African e-commerce may be about to come of age

African e-commerce may be about to come of age

E-commerce in Africa has grown dramatically over the past year, says Robin Philip of payment services provider PayGate, and is now in a position to support the massive consumer boom that’s happening across the continent.


“A year ago we said e-commerce in Africa wasn’t ready for take-off yet, largely because there weren’t enough acquiring banks to make the ecosystem work,” says Philip. “The lack of business infrastructure was a real brake on development. But things have changed very fast.”


Philip says established banks in many African countries now have a much better understanding of e-commerce, and an appetite for it. “There are now many more acquiring banks in key African countries than there were a year ago, especially in Nigeria, Kenya, Mozambique, Tanzania, Rwanda and Namibia.”


The process is gathering momentum, he says. “A year ago it was about which banks were going to take the lead when it came to accepting online payments, and whether the returns were going to be worth the costs. But we have learned how to make a clear business case for these markets, and the links are coming. Once a bank is open for e-commerce business, they can attract a lot of business.”


Establishing direct relationships has been important for PayGate, notes Philip. “You have to do the face-to-face contact -- everything changes for us once we’ve actually visited a country. Now that we’ve spent the past year growing relationships in Africa, we can offer our clients substantial e-commerce capability.“


Philip says payment service providers such as PayGate can help provide a soft landing for e-commerce operations that are new to a particular territory. “You don’t have to blaze any trails,”he says. “With one integration we can give you access to acquiring banks as well as key alternative payment methods like MPESA and the Verge debit cards which are very popular in Nigeria.”


East African nations like Kenya, Rwanda and Uganda are countries to watch, says Philip. “They are very closely integrated with their neighbours via the East African Community, as well as with the rest of the global economy. There is strong evidence to suggest this is helping to drive rapid economic growth.”

Published in Online
SA e-commerce reaches tipping point of acceptance

As South African e-commerce gains momentum, retailers can expand their reach significantly by adding online and mobile channels and picking the right technology and fulfilment partners for the journey.

Published in Online
3 things every online business needs to know about card payments

If you do business online, it’s much easier to make a sale if you take credit cards – but, says Peter Harvey of payment services provider PayGate, e-commerce businesses need to ensure they have the security basics right.

Published in Technology
Online retailer doubles turnover by accepting credit cards

It took online outdoor products retailer three years to come around to the idea of accepting credit cards on its website – but, says owner John Guthrie, “It turned my business around. I should have done it from the beginning.”

Published in Online
Thursday, 14 February 2013 13:04

Think outside the credit card box to increase e-commerce sales

Think outside the credit card box to increase e-commerce sales

E-commerce sites and online retailers can increase their sales by offering a selection of payment methods appropriate to their target markets, according to Robin Philip of payment services provider PayGate.

Published in Sales
Wednesday, 16 January 2013 12:56

User experience the key to e-commerce growth in South Africa

Different components of user experience (UX)

Online commerce in South Africa is growing as more people gain access to the Internet and credit card facilities, says online payments provider PayGate – but greater attention to user experience would give this growth an extra boost.


“Credit cards are still the most popular way to pay online, but it’s not always as easy as it should be,” says PayGate’s head of client services Robin Philip. “At a recent think tank we held for executives from most of the country’s leading online enterprises, we heard that the online payment experience is still too awkward and difficult for many customers.”


The 3D Secure system was singled out as an area for improvement, says Philip. “3D Secure is a great idea to protect credit card holders by requiring an extra password at checkout,” he says. “But at the moment it’s not being implemented as well as it could be. Different banks have different screens, the system is not always explained properly and there are several different ways of issuing PINs. This lack of co-ordination makes consumers suspicious, and everybody is seeing high dropout rates at this point in their checkout process. Fixing this would do a lot to boost online commerce in general.”


Other popular payment methods include PayD for debit cards, and automated electronic funds transfers (EFTs) via services like SID and Payfast. “There are some other methods that have promise, but they’re either dollar-based with a low user base in South Africa, or restricted to a single bank,” says Philip. “All of them still need work to improve the checkout experience.”


In general, says Philip, merchants told PayGate that more could be done to create consumer awareness of the different ways to pay online, and to increase trust in these methods.


“One exciting development is the increasing number of cheque cards that are being issued,” he says. “These are effectively credit cards with a zero credit limit. Unlike debit cards, which take a lot of behind-the-scenes effort to work as an online payment method, cheque cards are very easy and convenient to use. They’re a great option for consumers who don’t want to take on debt or don’t qualify for credit.”


“There is a core group of local credit card holders who’ve been doing online commerce for years and are completely comfortable with it,” concludes Philip. “But e-commerce will only really take off when we succeed in making it available to a much broader market – and that is going to take a lot of work by the banks, card associations, merchants and payment service providers to make our payment systems simple, reliable and trustworthy.”

Published in Online
Thursday, 29 November 2012 16:05

eCommerce is booming – but it’s not a free-for-all

eCommerce is booming – but it’s not a free-for-all

e-Commerce is delivering good profits – but only for those who do it right. And as the environment matures, shoppers are becoming increasingly demanding, meaning that only the best e-commerce strategies will succeed in the future.


Recent research indicates that the world’s best sites are seeing rapidly-growing revenues as more and more shoppers take their business online. But this isn’t a ticket to easy money. In mature markets, shoppers are becoming more discerning, and are more loyal to e-commerce sites that are intuitive and informative, rather than buying simply because the goods are for sale online. Forrester Research says in the US, companies will make $280 billion from online sales by 2015 – up from 2011 sales of $176.2 billion.


In the UK, recent research by yStats found that shoppers spent almost £35 billion on the internet during the first six months of 2012 alone, with many of them now starting to shop online using their phones. More than half of all smartphone owners have now used their phone to make at least one purchase over the internet.


Other UK research, by EpiServer and OnePoll, found, however, that customer satisfaction ratings are dropping. In 2011, the top 25 vendors received an average satisfaction rating of 63%. This year, that figure has dropped to 58% even though shoppers are buying more and more online. Most of them (57%) tend to buy only from a few favoured websites.


This illustrates that e-commerce vendors with a solid and carefully-planned strategy will eventually take the lion’s share of the growing e-commerce market.

Keeping pace with change

But shopping behaviour changes tremendously in a very short time. The landscape evolves so quickly that if you don’t watch it daily, you will fall behind. Now customers want more than just products for sale online. They want an experience – including product comparisons, reviews, facebook discussions; they want to book online and try it on in-store. The days are over where the retailer and his technology determined how customers touch and interact with the brand and products.


Today, it is all about being customer centric. It is the customers’ iPhones or iPads, and their social networks, that determine who, where and how people interact with a retailers brand and products.


There are key factors in keeping shoppers on a site and encouraging them to buy. These include ease of navigation, full integration with back-end systems, personalisation of the shopping experience, cross-selling, an effective multi-channel presence – including a mobile site, and regular communication with shoppers about new products they may be interested in.

Stay focused

It’s important to remember that an e-commerce platform is intended to sell products. This may seem obvious, but too many brands put the emphasis of their site on design – not selling. Don’t fall into the trap of putting the focus too much on attractive design. You need to focus on sales; so there needs to be a very careful balance between the design, the brand and converting sales.


Besides the content, attractive layout and high quality images, the site needs to be intuitive and offer added value – like presenting associated products in a logical way.


It’s about a lot more than offering affordable goods – you need to give the user what he is expecting to see at the right time, at the right place. Buying online should be a pleasurable experience – like dealing with an experienced salesperson.


Having a multi-channel presence can boost profits and improve the customer experience. But to be effective, a multi-channel strategy should ensure that the online and offline experience is completely in sync, allowing the customer to enjoy the same brand experience at every touch point.

Don’t drive away customers

In contrast, having an e-commerce site that does not deliver a good user experience is possibly worse than not having an e-commerce site at all. When the consumer is annoyed by the shopping experience, they are driven away. Their bad experience colours their perception of the entire brand, and not just the e-commerce component of it.


When retailers under-invest in their e-commerce platforms, strategy and integration into their back end systems, their sites cannot deliver what online shoppers are after - a frictionless buying experience across all key touch points.


Vaimo is an international e-Commerce expert and South Africa’s only Magento Gold partner.

Published in Online
E-commerce in Africa: Not quite ready for take-off

Lack of bandwidth is not the only factor hampering the development of e-commerce and online business in Africa, says Peter Harvey, founder and MD of PayGate: The continent also needs a much more sophisticated financial infrastructure.


“To make e-commerce happen you need a complex ecosystem for making and processing online payments,” says Harvey. “Africa’s bandwidth problem is well on the way to being solved, but the online payments system still has a long way to go.”


Banks are one critical part of the ecosystem, says Harvey. “The first step in an online transaction is a person with a valid credit or debit card – so we need our issuing banks to speed up the rate at which they are rolling out cards to their customers. Debit cards are likely to dominate, because most Africans have little experience of handling credit and credit cards carry huge risks for banks.”


Next, says Harvey, the continent needs a cadre of acquiring banks that are prepared to accept online payments on behalf of their merchant customers. “At the moment, the business case for making the necessary investments is still difficult. An acquiring bank who wants to get into e-commerce will need to buy the appropriate licences from the card associations like Visa and Mastercard, install card processing systems, hire skilled staff to manage those systems, and understand and manage its risk of being exposed to fraud.”


It’s a big ask, notes Harvey. “Whoever takes the lead is going to incur a cost, and it’s not yet clear whether the returns will be worth it. But there is hope: As the retail sector expands and starts to offer point-of-sale card transactions, more cards will come into circulation and there will be more consumer demand for online shopping. Sooner or later, the balance will tip”.


Visa and Mastercard are both interested in the African market, adds Harvey, but are likewise struggling to find a business case. “It’s easier to find a bank that will issue cards than one that will acquire transactions, which leads to a big imbalance between supply and demand. Tourists arrive expecting to be able to use their cards, and more and more locals want the same – but it’s still hard to find merchants who will accept them.”


Harvey says payment service providers (PSPs), who offer the payment gateways that link customers, merchants, banks and the card associations, are vital connectors in the ecosystem. “As PSPs we obviously have an interest in growing the whole network,” he says. “If we do our job properly, we can play an important facilitating role that includes educating merchants, helping them to find acquiring banks and helping to manage their relationships with those banks.”


One of the big hurdles is the desire of many African banks to make exclusive agreements, Harvey adds. “If you take Kenya as an example, even though it’s one of the most advanced countries in Africa for e-commerce, MPESA is only available for one bank, over one network. If there were four or five acquiring banks and a similar number of PSPs, there’d be a lot more activity. Trying to tie people to exclusivity arrangements stifles the whole market.”


Until Africa’s e-commerce ecosystem reaches the point of sustainability, says Harvey, the continent is losing out. “The merchants who can afford to put in the time and resources, register a business offshore and use banks outside Africa. That means money leaves local economies, which nobody wants. The other alternative is for smaller businesses to use payment aggregators or ‘super merchants’, but they pay a premium for the service.”


In the long run, concludes Harvey, the best hope for success is for governments to take the lead. “Rwanda is an excellent example of a country where there is high-level government commitment to promoting e-commerce. They are putting pressure on the banks where necessary, and creating the legal frameworks that are needed to provide security. Those who follow that example will be the first to reap the rewards. Africa is a billion-person market with massive growth potential.”

Published in Banking
Tuesday, 14 August 2012 12:35

Banks could slash online credit card fraud with one simple action

Banks could slash online credit card fraud with one simple action

Credit card fraud is one of the biggest obstacles to growing e-commerce,  but the risks could be slashed if the 3D Secure protection system was widely implemented.

3D Secure is the online equivalent of a PIN. Cardholders have to enter an extra password to complete an online purchase. That adds a layer of protection against fraud for both the buyer and the seller. If the seller isn’t using 3D Secure and a fraudulent payment is made, they could be forced to refund it up to six months later.

But,  3D Secure is not widely implemented yet, so customers often mistake it for a phishing scam when they first encounter it – which is where the banks come in.

The only people who have the clout to make sure 3D actually works are the banks.  At the moment we have a vicious circle: 3D Secure is not widespread so customers don’t trust it – around 15-20% will abandon the transaction when they’re asked for an extra password. So merchants don’t want to implement the system. Nobody wants to be first because they’ll lose out.

The solution, is for the banks to get together and simultaneously force all online merchants to use 3D Secure, starting with the biggest online players of all, the airlines. Between them our airlines are processing many thousands of online transactions every month. If they and a couple of other big e-commerce sites implemented 3D Secure, consumer perception would change very quickly and the smaller merchants would follow on naturally.

Banks should also do more to educate consumers. The 3D Secure screen that an online buyer sees belongs to and is designed by the bank, not by the merchant. Currently those screens do very little to reassure customers that what they’re seeing is legitimate – fixing that visual presentation could make a big difference.

The pain will quickly be outweighed by the gain.  It’s going to be painful in the short term no matter what we do but by dragging it out in the current piecemeal way we’re just extending the suffering. If it’s worth doing, let’s just get it over with – there will be lots of complaints in the first month but then it will be over.

On the other hand, if 3D Secure is not worth doing, let’s just scrap the whole thing. The current situation, where the banks are forcing it on some smaller merchants but letting the big ones off, is not fair to anybody. It’s time our banks acted decisively. 

Published in Banking
Monday, 23 July 2012 22:14

Retailers: Is your future online?

Retailers: Is your future online?

With the growing maturity of internet services of all kinds, the necessity for a web shop for even smaller retailers is becoming more pronounced than ever. Where a decade ago, the suggestion of a push towards ecommerce and a move away from 'bricks and mortar' was undoubtedly ahead of its time, a lot has changed since then. Today, buying products and services online is, for many consumers, the epitome of convenience and value. It is also second-nature.
There are several factors which have combined to make it far easier, far cheaper and now also far more necessary for almost every retailer to consider an online sales presence.
From a technology point of view, the software and tools required to create a self-managed web store have advanced enormously. Where previously it was a complex, time consuming, clumsy and very expensive process to get your shop on the web, today it can be done in as little as three to five days. That includes full functionality to take credit card payments and with integration of the web shop front into the back-end ERP system.
Perhaps even more important is the ability for the retailer or their employees to manage the site, adding new products or items, introducing special deals, and so on. Combined with the low cost of establishing the web store, it is therefore possible to establish a new revenue stream with very little capital expenditure. Indeed, most web shops should fully repay the cost of their establishment within three to twelve months of commencing operations.
Of course, the web store has the 'traditional' advantages of an online marketplace, including a nationwide or even global reach, around-the-clock trade and reduced overheads as goods can be shipped straight from stock or even from suppliers.
With the runaway popularity of smartphones, combined with ever-faster and more affordable terrestrial internet connectivity, even if people aren't buying online, they certainly are searching to check prices, specifications and options. You want your store to be in those search results, so every web shop should be Google-optimised.
Retailers are compelled to consider online sales too, because the competition is increasingly moving online. Add to that the presence of new retailers like Groupon and ShopSavvy which are competing for the same customers and the necessity to take action should be clear.
With internet shopping becoming standard practice for more consumers than ever before, the time has never been better for the retailer to consider a move into the online space. It may just be a move that assures the future of your retail operation.

Published in Online
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