VISA’S STUART BROCKLEHURST ON AFRICAN E-COMMERCE AND PAYMENT SYSTEMS
E-commerce was meant to be the thing that was going to transform Africa’s trade with the rest of the world. The practice has fallen some way short of the theory. But African e-commerce is actually worth US$31 million a year, of which US$30 million is from South Africa. News Update’s e-commerce correspondent Cordelia Salter-Nour talks to Stuart Brocklehurst, VISA’s President, Development, CEMEA region.
The division of which you are part covers Central and Eastern Europe, the Middle East and Africa (CEMEA). Part of your special focus is on ecommerce in Africa. How do you view the state of e-commerce in Africa? How successful is it so far and what are the main challenges ahead?
The state of e-commerce in Africa mirrors the position globally. A while ago, it was seen as the answer to everything - it would propel Africa forward economically as the Internet destroyed the barriers to trade and allowed the continent to leapfrog other markets which were weighted down with legacy technology. As with much of the hype surrounding the web boom, this has not been realised, but equally the despondency which has followed more recently has been ill placed. There are a number of businesses from Accra to Addis Ababa and from Cairo to the Cape which are thriving, enriching the lives of their customers and delivering a small but steady contribution to economic growth.
What level of e-commerce business would you estimate that is taking place on the continent using VISA in round terms? Including South Africa and excluding South Africa?
Through our systems we’re seeing $30m a year from South Africa and about $1m a year from the rest of the continent.
For the most part ecommerce is still firmly tied to the need to have some form of plastic credit card. In your view is e-commerce ever going to be liberated from plastic and if so, how and when?
It’s the nature of doing business virtually that cash just doesn’t cut it. Electronic trade requires the electronic transfer of funds, and the most widely held and accepted form of electronic payment is that driven by the number on a Visa card. With 1.2 billion cards accepted at over 20 million locations thanks to a system which at peak times processes 6,000 transactions a second and has only had eight minutes of downtime in the last ten years - it becomes a natural fit.
How ready is the African banking system ready for the challenge of ecommerce?
Accepting e-commerce transactions is not for the faint-hearted. In the physical world volumes tend to move gently up or down, but ecommerce volumes can swing around wildly, creating significant exposure for acquiring banks. Amongst African banks, many have good understanding of e-commerce and are offering high quality, often innovative services - but equally, many others do not at present have the capital, the systems or the experience to engage in this type of business.
Is it currently possible for a business based in sub-Saharan Africa to get VISA merchant status allowing them to take online payments?
Yes, absolutely, and many do - but it’s not yet as easy as I’d like it to be. This links back to the banks - there are a number of banks in Africa which can help out, but they’re not spread around evenly and in some parts of the continent it can be tough finding one which can help.
Is VISA thinking of developing its own payment systems to open up online credit purchases to a wider group of people?
We’re passionately committed to expanding the benefits of formal payments services to ever more consumers, businesses, merchants and indeed economies. This is not necessarily through credit products, though. Debit cards are often the best introduction into payments. All Visa cards can be used for online purchases providing the issuing bank allows it.
On your website it says the most popular card in the CEMEA region is Visa Electron (70% of your total card base) which is suitable for cardholders with little or no banking history. What is the uptake of the Electron card in sub-Saharan African countries?
Very rapid - there are now 486,000 in Zimbabwe, 357,000 in Kenya, 217,000 in Botswana, 70,000 in Namibia, 22,000 in Seychelles. The Electron card is the ideal introduction to electronic payments and its widespread adoption across Africa is indicative of this.
VISA introduced a "chip off-line pre-authorized card" (COPAC) in Ghana through the Standard Chartered Bank in 2000. What has the uptake of this card been like in Ghana, which other African countries has it been launched in and how is it doing?
Visa is strongly committed to offline payments - and also to open standards. COPAC was based on a proprietary platform developed before the industry had agreed a common approach to smartcards. Currently we’re working to migrate our offline product over to the generic "EMV" platform upon which almost all Payment smartcards are based, which will provide it with far wider application.
Visa International CEMEA (Central and Eastern Europe, Middle East, and Africa) web address:
The author Cordelia Salter-Nour runs eShopAfrica.com