Tuesday, October 11, 2011

Using mobile payments for online payments

According to the International Telecommunication Union (ITU), Internet-user penetration in sub-Saharan Africa has grown from 0.5% in 2000 to 10.6% last year. The penetration in Nigeria is for instance estimated at 28% (Read here). While the Internet activity is growing at a massive rate, online shopping is curtailed by the lack of suitable electronic payment solutions.

A number of localised payment solutions can be found. These are all dependent on acquiring relevant merchants. Some examples are FloCash or options where bank branches receive online shopping payments (offline payments at GTBank). Further challenges for these digital payments are the challenges to integrate with cash, consumer education and trust, as well as a sustainable business case.

In most of these markets mobile payments are well-established, with good penetration and a motivated network of agents with cash-in and cash-out capabilities. Consumers are also often well informed of these payment mechanisms and generally have a high level of trust. It stands to reason that mobile payments will fill the gap needed for suitable payments to make online shopping work in Africa.

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