Global ecommerce is poised to surpass $23 trillion in 2017 and to continue to grow reaching close to $28 trillion in 2020, according to eMarketer. Meanwhile, African ecommerce represents just small fraction of this total market, with online retail currently making up only 1% of the total African retail industry.
Why online shopping in Africa is still lagging behind
The limited penetration of online shopping in Africa can be partially attributed to businesses’ fear of payment fraud. While there is no denying that there are challenges in online payments which businesses must be aware of, it is untrue that fraud is more prevalent with online commerce.
In fact, online fraud should be less of a concern than offline fraud, especially when working with a payment service provider that uses online security measures to prevent fraud and manage risks. Businesses that accept payments offline run the risk of being victims of fraudulent activity such as credit card theft or falsified forms of identification, due to limited control measures.
There are other advantages to offering digital payment solutions, beyond improved security, such as increased revenues. Consumers today demand a way to pay for goods and services online. By providing them with this option, businesses not only attract and retain more customers, but they also reduce the chances of losing potential customers to competitors who do offer digital payments. Not accepting online payments, these days, is not a viable option for companies to reduce fraud, and it is not conducive to achieving success.
Here are a few more reasons why working with a payment service provider to accept online payments is crucial for the success of any online business in Africa:
Highly Secure Method for Payment Receipt
Online payment service providers (PSPs) like Direct Pay Online must comply with PCI DSS (Payment Card Industry Security Standards Council) level 1 requirements and provide advanced risk management services, ensuring that merchants have the highest level of security when accepting online payments.
Risk management services include:
- updated black lists
- in-house fraud management teams who perform real-time monitoring and utilize fraud detection algorithms
- defined rules to identify potential fraudulent activity and security breaches
As credit card fraud can happen both online and off, merchants can achieve the highest level of security by working with a PSP that is PCI DSS compliant and dedicated to monitoring payment validity. Doing this will not only protect your business from fraud more effectively than not accepting online payments at all, but it will also make consumers feel more confident buying from you.
Increased Exposure to Customers
Ecommerce has been steadily increasing since its inception, leaving no geography behind. With limited shopping venues despite increasing incomes, African consumers are turning to ecommerce, as well. Ecommerce in Africa is projected to grow to reach $75 billion in 2025, according McKinsey’s Global Institute.
Thus, Africa offers huge growth opportunities to retailers, enjoying an emerging middle class population of 300 million potential shoppers, and projected continued growth of this market segment. Plus, approximately 70% of the population is under the age of 25, and this demographic is increasingly connected and online, and they expect their service providers and favorite stores to be, as well.
African retailers would be wise to add online shopping and digital payment capabilities to their sales methods, thereby taking advantage of this huge opportunity within their region, expanding their customer base, and increasing their revenues.
Increased Customer Satisfaction and Loyalty
Simple and efficient online payments contribute to positive customer experiences and increased customer satisfaction. With the growth of ecommerce in Africa and a dominating young population, as we discussed in the previous point, it is clear that this market is learning to appreciate the benefits of completing transactions anywhere, anytime. By offering customers a secure, end-to-end process for online shopping and payment, vendors will reap the benefits generated by a satisfied customer base, gaining their trust, loyalty, and ultimately, future purchases.
Global Expansion is within your Reach
With high rates of ecommerce penetration, combined with the significant spending abilities of international customers, the ability to participate in cross border ecommerce can be a huge growth driver for African retailers. But in order to take advantage of this opportunity, merchants must accept online payments.
Leading online payment platforms offer businesses access to a wide variety of payment methods and currencies. With the option of offering both local and international credit card acceptance, and a variety of mobile payment methods, merchants can reach international consumers and accept cross border payments, safely and securely.
With the highly secure payment methods PSPs offer, African merchants stand to gain not only from the positive experience they offer their customers, but from the added benefits of PCI DSS level 1 protection against fraud as well.
Effective payment platforms enable businesses to expand their reach to local and international markets, while gaining the loyalty of these consumers and ultimately their return business.
Accepting payments online is a highly effective method for protecting your business from potential credit card fraud, while expanding your businesses and market reach and increasing your revenues.