Breaking through Africa’s payments pain barrier – lowering online mobile transaction costs
For Africa’s digital economy to work, it desperately needs an effective payments system that can handle micro payments and with transaction costs that are reasonable. Microsoft’s 4Afrika initiative has partnered with payments provider Skrill to offer an answer. Russell Southwood spoke to Nilesh Pandya, SVP Emerging Markets, Skrill and Frank McCosker, General Manager, Affordable Access and Smart Financing Africa Initiatives.
Owned by private equity company CBC, Skrill has been operating since 2001 in the online payments space. It has partnered with Microsoft’s 4Afrika initiative to launch its e-commerce platform in Africa: the product has been designed in such a way that it will both meet African requirements and lower transaction costs.
The platform is designed to bring hundreds global internet brands to the African digital consumer for the first time: it has 180,000 merchants on its platform globally.
Through the platform, users will now be able to use their mobile wallets and digital currency to buy from Africa’s online merchants, including iROKOtv, Spinlet, and a range of social gaming providers – all at a fraction of the cost of a typical online transaction. It can also be used to send international remittances more cost effectively.
Skrill works from an online portal (branded by the operator) that allows the user to create a mobile wallet and to fill it. Access to the portal is free with the data charges being picked up by the operator. Customers can make payments for transactions using a simple PIN number to validate the transaction. The merchant is charged a 20% fee by Skrill per transaction, part of which it pays part to the mobile operator.
Although this is still high (and higher than some credit card charges), it is nonetheless lower than the 50% mobile operators charge for USSD airtime billing. And on its international remittance transfers, it only charges 5% to the customer making the transfer.
Nilesh Pandaya, Skrill stresses the benefit to mobile operators of getting customers to use data for a wider range of everyday things to replace falling voice revenues. It has already signed a partnership with MTN, been integrated into MPesa and has several other operator announcements in the pipeline. The MPesa service has not yet been marketed but has already done 5 million euros in authorized transfers.
From Microsoft’s point of view, the initiative is a mix of soft and hard purposes. The portal gives the user access to its One Drive product that has all the MSOffice software for free. Skrill is also integrated into its Skype offering and can be paid for using Skrill. At the softer level, there is also a virtual library of useful materials and services including commodity prices, feed prices and weather.
Skrill may turn out to be an answer rather than the answer to Africa’s payments pain barrier but something that unlocks digital payments is as good a start as we’re going to get. More and better will follow as the mobile operators get the hang of content and services and people paying for them…
Correction: In the Top Story in our last issue, we said that there are 66,000 Netflix subscribers in South Africa. After some discussion with those who responded that this figure was incorrect, with their help, we’ve reached the conclusion the figure is more likely to be 10-12,000. However, this still remains an extremely large number of people using a service that is not yet available in South Africa ☺
Digital Content Africa: Balancing Act’s web TV channel Smart Monkey TV has launched a new e-letter called Digital Content Africa. On a fortnightly basis, it will cover online film, music, publishing and services and applications. We have already produced 20 issues and these can be viewed on this link:
Essential reading for those in mobile VAS to anyone just interested in what African and relevant international content they can now get online. If you would like to subscribe, just send an email to email@example.com with Digital Content Africa in the title line. Some examples of past issues below:
Everybody knows that the dice are loaded and that the deal is rotten…Operators not opening mobile channel for Africa’s digital content makers
Digital Content Africa Z26: Africa’s coming digital content generation – Market research from 3.5 countries looks at music, TV and film use
Digital Content Africa Z24: The South African TV announcer who runs a fashion blog from Moscow which she is going to turn into a business
Videos interviews to watch:
Pascal Schmitz, iBiskop on overcoming the three barriers to downloading: bandwidth, price & piracy
Juliet Asante on Mobilefliks rolling out across Africa to 30 countries
Michael Akindele on Solo's new mobile film and games offer and its new Android app
Jeremy Doutte on Jumia Nigeria as the largest retailer in Nigeria and its top selling items
Adedoyin Ogundoyin on WAGE 14, West Africa's first computer gaming exhibition and conference
Eric Nienaber on social messaging app Chatly for those who value their privacy
Bas Hoefman, Text To Change on using SMS for Tanzania's largest m-health programme
Nicola D'Elia on Facebook as an "on-ramp" for Africa's first-time Internet users
Raul Martinez, Millicom on digital content in Africa and how it's backing start-ups
Mark Bennett, iSchool on using low cost tablets to change learning methods in Zambia
Babatunde Olaifa on the biggest football website in Africa, Goal.com