Different approaches needed for African e-commerce

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For example, MPESA is wildly popular in Kenya, Tanzania and Uganda, where there are more mobile money accounts than bank accounts. But it's never taken off in South Africa and is not even a blip on the radar in Nigeria.

The Nigerian payment method of choice is the Interswitch Verve card issued through 16 of the country's major banks. There are over 10 million Verve cards active in Nigeria, far outnumbering MasterCard and Visa credit cards. Those have a definite presence in the country and will continue to grow, but anybody selling into the Nigerian market who doesn't take Verve payments is going to struggle.

Africa's diverse payment methods also come with different risk profiles for merchants. Some merchants are wary of MPESA, for example, because mobile money is such a new thing. But, because it's a direct cash transfer system it's safe for merchants - one has not yet heard of a way to defraud someone using MPESA.

Card payment systems are more vulnerable, which means merchants need extra protection. In the case of MasterCard and Visa, one has the option of using 3-D Secure, which is not available for Verve cards, but merchants can take other steps to protect themselves.

The bottom line is that any company thinking of doing e-commerce in Africa needs to research its market very carefully. They need to assume they will need a different approach for each country, and need to find a skilled and experienced local payment services provider to advise them.