Online retailers in key African markets are stepping up efforts to prevent fraud and gain the trust of consumers in order to encourage online payments in a region where, because of the vast numbers of mobile users, the potential for e-commerce is enormous.
"Security is still one of the biggest issues we face in the market," says Cristobal Alonso, the CEO and co-founder of African social marketplace MOBOfree, which this week introduced an ID verification program for its users in Nigeria and Uganda.
The company declines to post about 30 percent of the ads intended to go on its site, due to signs that they are for scams. "We can only imagine how big are scam volumes on boards of classifieds which do not have any advanced security tools and procedures," Alonso said by email.
MOBOfree currently has almost four million registered users, with more than two million monthly active users and over 400,000 active classifieds in Nigeria and other African countries including Uganda and Zimbabwe.
MOBOfree's ID verification allows users to take photos of their identity documents and upload them onto the platform along with their e-mail and mobile phone numbers. Potential users are confirmed or rejected within 48 working hours before they can be allowed to buy, sell and swap products and services with other trusted site users.
Over time users will gravitate to the methods of assuring security for transactions that appear to be the most worthwhile, Alonso said. "I am sure ID verification has the potential to be one of them and I will not be surprised if all our competitors will put it in place soon."
Lack of trust in online payment systems is marked by, among other things, the small percentage of online shoppers who pay using online methods. For example, less than 30 percent of customers shopping on the Jumia site earlier this month paid online, even though most of its traffic came from mobile devices, according Jumia Nigeria Managing Director Jonathan Doerr. The majority of users, he said, prefer the cash-on-delivery payment option.
To help fuel its efforts to encourage online payments, Nigerian online mall Konga last week acquired the mobile money license of Zinternet to enable it to provide payment services directly to its customers. Zinternet is a mobile banking and payment provider that has developed technology to electronically send and receive money, recharge call credit on phones, and pay for goods and services.
The acquisition of the license comes after the launch, two weeks ago, of Konga's one-click payment mechanism (KongaPay), which is linked directly to customers' bank accounts and mobile numbers. Every time a customer triggers a transaction, the bank sends a secure authorization code to the customer's registered mobile number.
Konga CEO Sim Shagaya says KongaPay is a partnership with Nigeria's banks to remove the uncertainties customers associate with pre-paying for goods and services they are yet to receive.
Online payment and transactions can be more secure and traceable than cash exchanges, MOBOfree's Alonso said. As online retailers settle on ways to make Web purchases and trades secure, online payment use will become mainstream, he added.