While cash is not an unimportant part of life in developed countries, it certainly isn’t central. The vast majority of Americans, 80 percent, carry less than $50 on them at a time on average and about half carry less than $20. Cash is still king in the developed world when it comes to small dollar purchases- 89 percent of buys under $5 dollars are don in cash, and 58 percent of purchases under $20 involved greenbacks – but paying with plastic pretty rapidly edges cash out from there on up.
In the developing work the situation is very different, NetPlusFounder and CEO Wole Faroun told Karen Webster in a recent “In Their Own Words” conversation, something he had very direct experience with in his native country Nigeria.
“Until about 2008 – around right around the time I was graduating from Wharton and working with a tech firm in New York – the Nigerian market was almost entirely cahs. If you wanted to buy basically anything – you had be carry cash on you,” Faroun told Webster.
The situation began to shift rapidly 9 years ago when Nigeria’s Central Bank began its officially push to build a cashless economy nationwide.
“The wanted to institutionalize this policy nationwide, and obviously they needed the stakeholders to sign on to make it work. Banks were the first players to get on board – and they started issuing card and building electronic payments channels but that was only part of the puzzle.”
Cards issued to consumers were only as useful as the number of places that were able to be accepted – and merchants at the needed “the technology to sell and the ability to actually take non-cash payments from customers.”
“That is why we started NetPlus,” Faroun explained to Webster. “What we do now is provide elecotince payment serviced and ecommerce service to merchants in Nigeria that can support them across channels. We offer payments support in store brick and mortar transactions place secure electronic channels in there so merhcants can expand and transition online to or recieve payments on the go with mobile solutions. That is what we do today, we see tremendous growth from where we started from.”
So much growth in fact that today Faroun and the entire NetPlus team are part of MasterCard’s StartPath program and considering both how they can epxand and future proof their offerings in their home market in Nigeria – and how they can perhaps expand what they’ve learned in one developing market trying to break its cash addiction into similar markets around the world.
Developing On A Green Field
Unlike the developed world where consumers waded into mobile technology and electronic payments incrementally over decades with dozens of products – Nigeria is a much more 0 to 60 environment.
“In our part of the market I spend a lot of time talking to people about how the African market leaped forward from cash to mobile with no stopover in between. There are 100 million mobile subscribers in Nigeria, there are 17 million merchants but the penetration of electronic payment methods penetration is at about 2 or 3 percent so there is a lot of room to grow. The economice of devices and taking payments at this point restricts their use to a certain segment of the market – we are looking beyond it because we to make this really affordable for small businesses and create a mindset that ‘this is good for my business and I want to do this to create efficiency for my business.”
Admittedly, he notes, that is not always an simple – particularly as Karen Webster noted as they are trying to simultaneously recruit consumers onboard for new payment methods over the cash they are used to.
“The hardest part was adoption, changing the way business is done from the cash based tradition. A lot of effort had to go in from a network perspective and for the entire market in terms of convincing people. The fact that the govt was invested in making that happen helped the player growing into the space. I think the most painful period was the early days. Customers are catching up to it and transaction are easier and thus it is easier to understand the value proposition.”
On the consumer end – he noted a lot the work was around actually making sure the experience worked – because as with early day on many new technology form factors, there were many previously unknown failure points in the early days. Once the playing field was better leveled – and cash alternatives began functioning as reliably as cash – merchants really became a key piece of recruiting customers.
“The incentive structure was given to the merchants to sort of speak to their customers as they enabled their customers to do this. When you start presenting these new payment methods to a customer at the point of checkout – the customer begins to think about it.”
And as Nigerians are increasingly signing on to the web with mobile- and accessing more digital commerce opportunities that require web-based payments – the increased access to goods and services becomes a significant draw.
“In the context of the market we are in, but we didnt’ want to be left behind in what we are doing – we want to be able to evolve and help customers and merchants evolve.”
The Start Path Opportunity
And it was Faroun and team’s desire to look at all the opportunities – not to mention their shared commitment to building a less cash dependent world that made -NetPlus a natural fit for MasterCard’s Start Path Accelerator program according to program VP Amy Neale.
“Wole is a classic entrepreneur and is always on the lookout to spot opportunities and leveraging that to build targeted products for merchants. We’re very excited to be part of the vision he is building.”
And, both Neale and Faroun noted – possibly involved in building the program out beyond its Nigerian starting point. Though they had no specific announcements to make at this time, Faroun noted that working with Mastercard had really help him and his team see the global picture of payments and commerce in the developing world, and that many of the issues are common across the globe.
“We are beginning to see that some of the problems and pain points we are trying to solve for in Nigeria are outside our borders and outside of Africa. We are doing can have applications in the MIddle East and South America and working with Mastercard across the globe there are areas we as a company can begin to explore in a realistic way that we really couldn’t otherwise.”
Moreover he noted, Mastercard’s vast troves of institutional knowledge across areas – particularly e-commerce and mobile point of sale, are allowing them to not only refine their systems, but also future proof them.
“In Nigeria, e-commerce has gone from zero to a $500 million per year market that has seen with 25 30 percent growth annually. And we there is still a lot to solve with payments, and logistics and last mile delivery issues. We are focused on and betting on to give NetPlus growth into the future,” Faroun noted.
Because the future is coming fast – even in the developing world that tends to get someone less attention that it’s developed counterpart for technological or financial services innovation. But they need is there – and increasingly so is the merchant and consumer interest – and NetPlus is increasingly readying itself to be the player to step up and fill the need. With a little help for its new friends and Mastercard.
Source: http://www.pymnts.com – Payments
NetPlus And Winning The Battle Against Cash In The Developing World