Konga’s bold attempt to revolutionise online payments in Nigeria

Nigeria boasts over 80 million mobile internet users doing all kinds of stuff online. Yet, as big as the Nigerian tech landscape is, getting customers to pay online is still a major obstacle for ecommerce.

Before the country’s two largest online shopping companies, Jumia and Konga, launched about three years ago, several entrepreneurs tried and failed to get Nigerians to embrace ecommerce. Today, leading ecommerce stores might have also failed if not introducing its cash on delivery payment option, which is the preferred payment choice for more than 70% of online transactions.

During an exclusive interview with Jonathan Doerr, the managing director of Jumia Nigeria, he admitted that less than 30% of the Jumia shoppers choose to pay online.

The question now is why are Nigerians so reluctant to make online transaction, even though the head of Uber Nigeria, Ebi Atawodi, recently said financial institutions in the country should be commended considering the fact that “Nigerian banks have moved ahead of their counterparts in other emerging markets”.

The answer is lack of trust.

Introducing KongaPay

Many Nigerians still see ecommerce as something that could easily be manipulated and succumb to fraud. The lack of trust is further supported by the non-existence of any legal framework that would protect online shoppers against fraud reports. But ecommerce giant Konga is hoping its new payment system called KongaPay would be the industry’s latest game-changer.

Aptly so, the ecommerce giant believes that the ecommerce ecosystem in Nigeria (even elsewhere) can only be successfully built on trust and safety, which are the two components that would allow for a seamless exchange of goods, services and most importantly payments.

KongaPay is described as a payment solution that allows users to perform one-click payments on the Konga marketplace, somewhat similar to Amazon’s one-click solution.

Here’s how it works: every time a customer triggers a transaction, the bank sends a secure authorisation code to the customer’s registered mobile number. Anyone with a bank account and a registered mobile phone number can use KongaPay. This means there is no need to sign up for internet banking.

This product was unveiled at a KongaPay Demo event held in Lagos recently. After live demonstrations of the “easy” and “secure” use of KongaPay on the centre stage, industry executives gathered around various shopping stations where they too signed up to use this new feature.

KongaPay is now available on a “limited first-look release basis” with national launch scheduled for the third quarter of the year. But the payment solution has been integrated with Access Bank, Diamond Bank, Ecobank, FCMB, First Bank, GTB, Heritage Bank, UBA and Zenith Bank. It plans to integrate most Nigerian banks to achieve widespread access. Sim Shagaya, the CEO of Konga said:

KongaPay is a partnership with Nigeria’s banks. We strongly believe that together, we could change the face of online shopping in Nigeria by removing the uncertainties customers associate with pre-paying for goods and services they are yet to receive.

He added that payments made with KongaPay are held in escrow until the transaction is satisfactorily completed. “They are in full control of their money, and will get instant refunds for cancelled or returned orders with just an easy click,” he said. “The use of KongaPay eliminates the need to enter sensitive personal information such as card details or Internet banking passwords.”

Overcoming legal woes

For any company to be involved in providing payment services, it needs the approval of the Central Bank of Nigeria (CBN) in form of a license — something that Konga does not have. To overcome this hurdle, it acquired the assets and mobile money license of Zinternet Nigeria Limited.

Speaking on the acquisition, Shagaya said that the acquisition would enable the ecommerce giant to overcome friction in the adoption of online shopping:

We are excited to work with our banking partners to extend the reach of their services in driving the adoption of cashless payment solutions. As merchants ourselves, we know firsthand the frictions involved in transactions processing and we look forward to exploring how our banking partnerships could eliminate this friction not just for Konga, but also for SMEs around the country.

Truth be told

Setting the PR fanfare aside, the truth is that no one really knows what strategy is needed to get Nigerians to start paying online. Even though some Nigerians are gradually embracing e-payment, the sample size is still not large enough.

This is why all eyes are on KongaPay — even close rival would be watching and could be praying it succeeds to leverage the success and take ecommerce in Nigeria to the next level.