Nigeria: A major hub for African e-commerce start ups
Even 3 years ago, online payment systems in Nigeria were inefficient and often led to failure of payments. As a result, Nigerians harboured a deep skepticism of internet based businesses payment gateways. However, things are rapidly changing and today, Nigeria has become one of the major hubs for African e-commerce start ups. We take a look at the factors contributing to this change.
PayPal paved the way
In 2014, PayPal was launched in Nigeria. Within a year of its launch, Nigeria became PayPal's 3rd largest mobile e-commerce platform in the world with transactions of over $610 million done over phone. PayPal claims that in 2016, it will facilitate transactions of around $819 million. Since PayPal's launch, several indigenous start-ups have come up to bolster Nigeria's e-commerce and end-to-end payments market.
The failure rate of Nigeria's old online payments systems
Before PayPal and all the local payments start-ups came up in Nigeria, the existing online payments gateways had a failure rate of 60-70%.
Tayo Oviosu's Paga
In 2009, an entrepreneur called Tayo Oviosu quit his job to start an end-to-end online and offline payments company called Paga. Paga users, apart from using a mobile app for online payments, can receive and send cash offline via Paga's 10,000 strong agents network. Paga checkout payments processes can also be integrated by businesses and merchants on their websites.
Paga's financing
In October 2015, Tayo Oviosu's Paga raised a hefty $13 million in its Series B funding led by Adlevo Capital.
Shola Adekoya's KongaPay
Shola Adekoya, the CEO of Konga, one of Nigeria's biggest e-commerce companies, got frustrated with existing online payment systems and started KongaPay. KongaPay allows users to seamlessly pay for purchases without a card, directly from their bank accounts after a one time authentication. The KongaPay app which is synced to users' bank accounts, can also be used to pay for mobile recharges and bills.
The volume of electronic payments in Nigeria
According to 2015 figures, the total online and offline electronic payments in Nigeria had an estimated value of $155 billion.
Other local online payment start ups
Jumia, another major Nigerian e-commerce company with vast resources, launched JumiaPay to allow shoppers to carry out transactions using its payment gateway. Iyin Aboyeji, the co-founder of a Mark Zuckerberg-backed coding start up called Andela, is set to launch a payments start up called Flutterware which aims to make online transactions easier for global companies by "process[ing] payments like a local African company".
