What happens when online shoppers cannot pay with cash or with POS?

…a popular ecommerce strategy in Africa.

Most online shoppers in Africa would not pay online untill they have recieved an item they ordered. I first noticed this while working on a project for a Kigali based client. But this is not entirely unique to Africa. In the Netherlands and elsewhere in Europe, Shoppers now have a choice to pay electronically after delivery, and sometimes with cash.

This problem is however not as profound in Europe as it is in Nigeria, and other African countries. But it’s not the only thing that make our situation in Nigeria unique. Shoppers in Nigeria who choose to pay for their oders after delivery have limited means of doing so. In most cases, the delivery guy expects them to pay with cash. However, some delivery guys now carry point-of-sale (POS) devices with them. This has a couple of challenges.

Jumia’s ‘food you love’ will arrive with a POS that might not work.

Recently, a friend could not pay with a POS device with which the delivery guy came with -the device couldn’t connect in his area. Another reoccurring problem is when the device runs out of battery. I have had to withdraw POS machines in the past becuase the merchants have limited energy supply to power them. But this doesn’t tell the entire story. At anytime one choses to pay with POS on delivery, he’s also paying for the cost of the technology.

There are other things that could prevent a shopper from paying with POS machines even when the delivery guy showed up with one.But I’m mostly interested in understanding shoppers’ decision to defer payments until orders have arrived, and also in solving problems around when shoppers cannot pay with cash or POS on delivery. This is a real problem but often neglected. It’s unlikely that the delivery guy will leave a POS machine behind in situations like this. Unfortunately, there’s no product in the Nigeria’s payment industry that’s currently addressing this problem (I could be wrong).

With a friend, we are currently studying the market to solve this problem. Our goal is to enable shoppers pay for their items at their convnience -in a neutral environment devoid of any form of pressure from sellers. We hopeful that this will boost consumers confidence in online shopping and enable merchants to sell more.

In the course of working on this project, we’ve had to provide answers repeatedly to, ‘what happens when the shopper absconds with the item?’. This is a possiblity in Nigeria and we dont pretend to have all the answers. However, Nigeria’s Financial industry have recently gone through major infrastructure upgrades with the implementation of the Bank Verification Number (BVN) for all bank customers. There’s also now the Credit Risk Management System (CRMS) that’s intended to help banks conduct status enquiry on borrowers. We intend to leverage on these infratructure and other emerging ones as we strive to solve this problem. Already, some Fintech firms are making good use of this to minimise risks in their markets and serve their customers better. Paylater, a lagos based firm is using BVN to vet prospective loan applicants.

Although we’re excited about a possibility of solving this problem, we’ve also had to deal with other problems that are unique to the Nigerian market. For example, most of the home addresses in Nigeria are not easily traceable. BVN (our main means of identification) is not designed to update home addresses as people move houses. This makes solving this problem even more difficult. As a result, a number of options are on the table. One of which is to do a managed-roll out -meaning that this service will be available in the beginning, to low-risk customers. These are customers on whom we have reasonable level of confidence that they pose limited risk of absconding. To achieve this, we want to collect more information on the customers to support what could already be done with BVN and CRMS.

This project is currently in development stage, hence we are open to ideas and interested in working with people with solid industry network and experience to solve this problem.