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The problem with e-commerce and online payments in Africa

A lack of true online payment options is crippling African e-commerce, and South Africa is no exception. The inability to accept payments for products and services on equal footing with the rest of the world means that many viable business options are not available for merchants in Africa.

The few options there are for African e-commerce take a certain amount of business history, wealth or contortions to attain. Let me give some examples.

  • You have a business big enough to set up a merchant account that accepts the normal Visa and MasterCard level of service (business history).
  • You have multiple addresses outside Africa yourself, allowing you to set up your business entity in another country (wealth).
  • You have relatives or friends in another country who allows you to set up your business address in their country, and then remits your balance to you each month via their bank (contortion).

Anywhere in the world, unless you’ve already got the money or have the proven business that allows you to qualify for a standard merchant account, you only have one real option — PayPal (some would add WorldPay to this, but it doesn’t have the low cost of entry that PayPal does).

Not in Africa, though. You see, in Africa PayPal only allows you to send money to people; you can’t receive or withdraw it, which of course defeats the purpose of trying to run a business.

Is there a solution?
Though there aren’t any options right now, beyond the traditional bank merchant account that is neither simple nor quick to set up, that doesn’t mean that something cannot be done.

What needs to happen is for someone to look hard at the potential usage in Africa, and then figure out how to marry that to a mobile solution. The challenge is not just to serve the needs of the wealthy, but also to make a solution that works for the average African.

In South Africa, Wizzit is probably the best option for mobile payments, but it has now online component for e-commerce — and it’s tied to one bank. In Kenya, Safaricom runs a mobile payments solution called Sambaza — it’s tied to one carrier and also doesn’t provide for e-commerce.

I would submit that the solution for Africa needs to be bank and carrier agnostic.

So, the beginnings of possible solutions are being seen, but no one has created the ultimate e-commerce option for Africa. Of course, if PayPal were to just allow us all to go through a little more stringent verification to ensure that we are real people with real businesses in Africa, then it would scoop up most of the online business overnight.



  1. Eve Dmochowska Eve Dmochowska 26 September 2007

    You’ll be happy to know that a South African PayPal-like system is going to be launched any day now. If you would like to know more, drop me an email I will put you in touch with the developers (who have some rather nice backers behind them)

  2. Mark Herpel Mark Herpel 26 September 2007

    Great post. Have you tried digital gold currency like Pecunix, Webmoney Gold, e-bullion or e-gold? Entry for merchants is free, instant and simple. Super low fees on all transactions, API, accepted worldwide and more. Please check us out.

  3. Erik Hersman Erik Hersman 26 September 2007

    Eve, I’ve sent you an email. I am very interested in learning more about their potential product. This is a topic that I’ve been talking about for a while, so am keen on anything that gets us closer to a solution.

    Mark, I haven’t tried any of those solutions before.

  4. Nino Nino 27 September 2007

    Very good post,

    I’ve read your thoughts about e-commerce and payments in Africa.
    I agree with you when you say that payment solution for e-commerce in Africa should be bank and carrier agnostic.

    But, even before e-commerce, there is alomost only one way to pay in Africa, and it is cash.
    Before going online, merchants need a more efficient payment system. This is already a big challenge.
    Suppose you see a very good article, you have money in your account, but not enough cash; you can’t buy it. That is already a shame. Checks are refused by many merchants, because they are unreliable.

    With the development of SMS solutions, of GPRS in some african countries, maybe the solution for e-commerce payment will come together with a general payment solution.

    The last time I want to buy an airline ticket in Cameroon, I have to get the money to the bank, walk through all the city with almost 1.500$ in my pockets (which makes me very afraid), and pay my ticket. Very though.

    E-commerce is important I know, but “physical commerce” may also be improve as well as e-commerce, or more.

  5. Ebrahim-Khalil Hassen Ebrahim-Khalil Hassen 27 September 2007

    This is not my area at all. Why not use something like MWEB Safe Shop?

  6. Nic Nic 10 December 2007

    Hi Eric,for those South Africans that are frustrated with PayPal,don’t despair there is a way around the problem to receive money from the 60 million PayPal members.At you will find a payment gateway that can receive credit cards and PayPal on your behalf at a small fee.You can easily accept credit cards and PayPal from your website.South Africans welcome

  7. Andy Andy 16 February 2008

    Although not currently a pan-African solution, there is a new South African Online Payment System called PayFast (a local PayPal equivalent able to accept instant payments via local EFT) is aimed at addressing this gap.

  8. Bronwyn dos Santos Bronwyn dos Santos 23 June 2008

    Dear Eric,

    We have just come across your article above. Please let me introduce Setcom as a option for online payments in South Africa.

    Setcom has been in the South African Market since 1999 and has been running as an alternative to PayPal for 5 years now. You do not need your own online merchant account, (although that option is available to you if you wish), you can trade in US Dollar and we have various payment options available (credit cards, POLi, eCheques, eDeposits). If you have a little html knowledge you can have your e-commence site running in under an hour. Go to for more info or feel free to contact me!

    Thank you and best regards

    Bronwyn Dos Santos

  9. Nqobile Ndlovu Nqobile Ndlovu 15 August 2008

    Hi all – well well. Many can claim to be PayPal alternatives etc. etc., but the true solution to the mentioned problem is surely iPurch International. It is about to be launched, and is a well thought-out Afrocentric solution which did not start as a European or First world solution that got trimmed down for us.
    Believe it or not it has taken FOUR years to develop, and nothing, literally nothing, has been neglected in terms of ensuring a world-class African (and generally third world) solution for Africans (ditto).
    You see most of the solutions offered above (and there are many more to come!) are borne of people who do not and have not been living the problem (at least from a customer’s perspective).
    Before I get lynched, please let me explain quickly. Even the originator of this thread has a Credit Card, for instance. I don’t think he lives in the township blah blah blah. He was concerned more from a trader’s point-of-view than a customer’s.
    Why the customer – simple. For any solution to work, it must be customer-driven. Many entrepreneurs have developed “township” solutions from without, disastrously so. It must feel right, be right and generally work right FOR THE CUSTOMER FIRST!
    Now if you introduce something that needs pre-registration or needs a bank account or needs a bit more computer literacy or is just generally an effort one way or another, then hey, good idea but no cigar.
    What we have in iPurch International is a gem in that (and many others too) regard. Simple, VERY imple to use, Ultra Secure, Universally Accessible, Affordable, intentionally beneficial to the eTraders as well (to stimulate SMME participaton in eCommerce) – the list is endless (see for the original concept website. The new site is obviously vastly different and the procedures, features and some of the aspects described on the current site will have been quite changed at implementtion.)
    As they say, watch this space….. (Don’t even BLINK in this case!)
    To quote a great man, I Thank You.

  10. Nqobile Ndlovu Nqobile Ndlovu 15 August 2008

    [For attention – Editorial Team]
    Oops! I have a couple of typos there – simple for imple, participation for participaton and implementation for implementtion.
    Can I, in true Kasi style, send a shout out to my long-lost brother somewhere in your establishment there, his name is one Trevor Ncube. Please ask him to call me +27 72 099 1967/ +27 31 262 9915 anytime – or drop me an email ne?

  11. Carl Carl 7 June 2009

    The reason why PayPal cannot be funded, only payment through them, is because of regulations in our country (South Africa) that prevent funding of e-currencies. I tried funding an e-gold or LibertyReserve (International e-currencies) account with wire transfer at ABSA and they just refused. Reason: against Reserve Bank regulations to fund e-currencies. If we can get these regulations changed, only then can we normalise online trading in South Africa

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