The Paystack founders, Shola Akinlade (r) and Ezra Olubi
Buying products online and making payments in Nigeria is becoming more common every day, but challenges remain. “Many merchants leave a lot of money on the table – some as much as 25% of their revenue - to failed transactions, unrecovered failed payments and chargebacks. We intend to turn this around for them”, Seun Runsewe promises. The Business Lead of Nigeria’s promising start-up Paystack vows to help Nigerian businesses accept payments from anyone, anywhere in the world.
There are still numerous issues involved in making online transactions in Nigeria. Consumers are still distrustful and skeptical; due to a lack of early-stage innovation by banks, online payments have yet to become routine. Paystack, a local startup founded by Shola Akinlade and Ezra Olubi, is working hard to develop its platform that will help change the practice and the perception of online payments. The Paystack developers have built multi-channel payment options for merchants across the country, enabling them to accept payments from around the world, via credit card, debit card, and direct bank transfer on web and mobile.
Praised by commentators
Both local and international ecommerce watchers have high hopes for Paystack. The young company has been praised by international industry commentators, that wrote favorable reviews, such as: “They will become a real tour de force in the fintech market”, “They are well positioned to really lead the fintech space on the continent”, and “One of Nigeria's most hotly anticipated tech start-ups.” Paystack was one the first Nigerian tech companies to be accepted into the world-famous Y Combinator progam, based in Silicon Valley. The young African entrepreneurs sealed a $1.3 million seed investment round led by Chinese investment holding giant Tencent, Comcast Ventures, the venture arm of the US largest cable company and Singularity Investments.
Interest from investors
The interest from international investors comes as no surprise – if Paystack succeeds in its mission, the potentially huge Nigerian ecommerce market could suddenly come alive. To Club Africa, Business Lead Seun Runsewe explains the current developments. She explains that Paystack can be described as the ‘intelligent bridge’ between merchants and payments processors. Paystack’s system connects to multiple payment processors and provides more options for merchants and customers. Since its inception in Jan 2016, in its first year, the start-up has garnered over two thousand active merchants, and processed about 600,000 transactions worth $10.5 million.
Seun Runsewe: “Paystack was built and continually evolves to provide as many channels as possible through which our merchants can accept payments. The multi-channel strategy is not just to get payments right and help any kind of businesses successfully accept payments, but to make sure all channels work hand in hand, to provide a simple to use, seamless and secure payments service.”
What is your take on the difficulties of online payments in Nigeria?
“Off the bat, there was a high barrier of entry, a cumbersome and drawn out integration process and slow infrastructure development. There were security issues and Nigeria still has low financial literacy. Reconciliation was a very big problem merchants faced. Before now, merchants only get a lump sum of their earnings. Further, merchants lose a lot of money (as much as 25% of their revenue) to failed transactions, unrecovered failed payments and chargebacks.”
Who will benefit most from Paystack?
“We have two key stakeholder groups who we tailor our efforts to - Our Merchants and Their Paying Customers. Our most important focus areas are Ease of Use and Intuitive product design, Faster Service and Accessibility. We work to make our payment methods easier and safer for customers, allowing them to make payments. By creating a safe and smooth process, we help our merchants solve their payment pain points, so they can focus on building their businesses.”
How are you going to solve the issue of the distrust of online payment systems among Nigerians?
“We regard our partnerships and collaborative efforts with traditional financial Institutions very highly. The incumbents have done the work over the years to build trust equity in Nigeria. We have also stayed within the parameters of regulatory policies for customer protection. Further, we try to be vocal about who we are, what we do and why we do it. This is the best way we can build trust in the market.”
What is the current stage of development of Paystack?
“We’ve spent the last year focusing on building and perfecting our product and we like to start thinking about further distribution. We have solved some key problems – lowering the barrier to accepting online payments, abating failure rates to record lows, providing as many channels as possible for acceptance. But there is a lot of room for improvement. We have the unbanked, the financially excluded who are yet to experience the convenience of online payments.”
“We will continue to build capacity to tend to the pain points of our clients across sectors. Currently we serve over 2,000 merchants in Nigeria. We are working on distribution in Nigeria. We are also in early talks to rollout in Ghana.”
Photo credits: Paystack