Money whether in its physical form (cash) or electronic form is a major driving force of the economy of any society. The need to move money from place to place (or person to person) for mostly transactional purposes has become one of the most pressing needs of mankind in recent times.
With technology finding its way into every aspect of our daily living, startups are currently innovating better ways of moving money (for good) all around the world and one after the other have come up with payment solutions they think will change the way money is spent; this list which includes the likes of MasterCard, Visa, UniCredit, Nasubá, PayPal, Square, Western Union, MoneyGram etc. irrespective of country of operation has seen a steady shift from the traditional way of directly exchanging cash for payment to more “modern” forms where some people might not have even had the privilege of spending physical cash in a full calendar month.
That’s on the finance part.
In Nigeria, there’s often the dispute of what (and what does not) constitute a Tech Startup/Company. Certain questions such as: Is it because it does all of its business via the web? Must it be the product of a technology incubator? Must it be venture backed? Must it have a website? And many such of those questions.
For the sake of clarity, I would describe a Tech Startup/Company as a business organization that makes use of technology in any form to offer a service (or even aid the delivery of its services). Going by that, we will then have to agree that a financial tech company is one that uses technology to deliver payment/financial solutions to clients, customers or enterprise users.
Even though online payments are yet to become mainstream and achieve at least a 50% adoption rate by internet users in Nigeria, there have been baby steps in this direction many financial tech startups have come from nowhere and have started threading in the murky waters currently dominated by the likes of Paypal and Skrill. It is notable to give a nod to the likes of Paga, Readycash, CashEnvoy and the rest that have been brave to solve perhaps one of the most basic problems of business. Trade.
Paga founded by Tayo Oviosu and Jay Alabraba is a payment service that allows you to send money to anyone with a mobile phone or make payments without the need for a bank account.
With Paga, users are able to transfer money to mobile phone numbers, purchase airtime, pay cable subscription, accept payments (for merchants). There are also offline agents that help facilitate this process to less tech savvy individuals too.
Using Paga online requires a free registration which is available using sms, a Paga agent or via their website. This would then allow you to make payments/carry out transactions on the platform. But if you are like me and you hate giving out your information, you can visit a Paga agent to carry out a transaction without actually registering.
Also the registration process is streamlined to just a name and phone number but that also limits the maximum transaction volume of a user until more information is provided. You can even link your bank account to your account. Depositing into your Paga account (also called an E-float Paga account) is done by depositing at a partner bank or at an agent location. In addition to a pin and password security, each deposit is insured by Paga.
One interesting feature of Paga which I find quite amusing is the ability to use Paga overseas (only charging international SMS costs). You cannot get an overdraft on your Paga account as spending is limited to the amount of money funded to your account which also means, there will be no need for interest payments.
Paga currently boasts of over 1.6million users and is funded by Acumen Fund, Aldevo Capital, Capricorn Investment Group, Goodwell West Africa, Omidyar Network, Tim Draper and has also received a grant from independent not−for−profit financial sector development organization, EFinA.
CashEnvoy established by Electronic Settlement Limited in 2009 is a payment service that allows businesses receive payments online from clients/customers using either their debit cards or from the CashEnvoy wallet. The service is email based.
Paying to a merchant via CashEnvoy is free, while a small commission is charged per deposit to the merchant, who can then make a withdrawal only after he has been verified.
Registering on the service is free and the platform features two types of accounts: a personal account for individuals that can be used to make payments; and a business account that can be used by merchants to accept payments. Pretty straightforward.
In addition to it’s free registration, CashEnvoy also rewards users 0.5% on each transaction they make and even request money from anyone with an email address in regions where CashEnvoy is accepted.
QuickTeller is an Interswitch owned web based service that allows a registered user pay utility bills, buy airtime vouchers, making payments and transfer funds. It also allows users to receive/transfer funds from their Quickteller accounts to a bank account.
Purchasing airtime via the service is free, but a convenience fee of N100 is charged for transferring to accounts and bill payments (PHCN, Cable etc) while a fee of N200 is applicable for transactions made to friend’s phone and emails.
The minimum transaction amount is N50 and no maximum amount is defined by the payment gate. However, there is a maximum recharge amount of N20,000 while bill payment and transfers are left to the card issuer to define.
Registration for regular end users is free, but registering as a merchant requires a one-time fee of starting at N 200,000.00 and a subsequent transaction fee of 1.5% to a cap of N2000 on each transaction processed. There may also be a N100 convenience fee charged to the cardholder.
One good feature of the Quickteller service is the “Payment History” feature that allows users to view their previous payments, useful for businesses who would want to audit payment claims sent to them by employees.
Currently Quickteller only accepts payments using their own Verve cards and Naira denominated MasterCards.
Launched in 2003, eTranzact is an electronic payment platform that is designed as an alternative to cash or cheque based banking system. The platform is built such that it can automate any consumer payment especially for corporate organizations just starting out with electronic payments.
In addition to enterprise services, eTranzact (using its mCommerce service) allows an end user to pay bills, buy airtime and even transfer funds.
To buy airtime vouchers, a customer just needs to log on to the eTranzact site, fill in the required details and the airtime is sent. While this function is not available on their website as at the time I checked, it is available through a third party add on the eTranzact website that allows a user pay for the airtime using only a Genesis card or through their PocketMoni account.
The downside of the eTranzact platform is the fact that one needs to have a smartphone before accessing most of the service offerings like funds transfer, bill payments etc. Or you could choose to visit a bank whenever you need to make a transaction.
In summary, I think the eTranzact platform is merchant first service on and it’s still trying to put the end consumer in the mix of things.
ReadyCash is a mobile payment service by Parkway Projects Ltd, that enables end users with mobile phones operate virtual accounts, which can then in turn be used to requests such as account enquiries, bill payments, funds transfer, purchases for goods and services, through their mobile phones.
The service is mainly targeted towards the unbanked, so registration for the service is available through five methods; By SMS, by dialing a USSD code, by registering through the ReadyCash app and by visiting an agent location.
To carry out a transaction using the service, a user must first fund his account through either Quickteller (a convenience fee of N100 would be charged), Payzone, ATMs (N100 convenience fee applies), UBA or Skye bank branches or an agent location after which transactions can be carried out to maximum of deposited amount. No overdrafts.
Withdrawing funds is almost as seamless as depositing, with a user being presented with four withdrawal options; ATMs, agent locations, other mobile wallets and into a bank account.
In addition to paying bills and online transactions, ReadyCash also allows a user collect money from abroad using just a user’s full name and phone number.
ReadyCash can be funded using a Visa or Mastercard and also allows merchants to accept payments through their platform.
So what is the way forward?
I think in the near future, Nigerian and African payment platforms should aim to go global and offer Nigerians a chance to carry out transactions generally as Paypal currently does. This may be a lofty dream, but with the progress so far, one cannot but dream.
Notable mentions: PayZone by Parkway projects, VTN, PayArena by Unified Payments.