Paypal commences services in Nigeria
Tuesday, 17th June 2014 heralded the entrance of PayPal’s renowned financial services in Nigeria and nine other countries. This development has so far been received with mixed feelings by Nigerians. Some see it as a long awaited solution to the business needs of Nigeria to maximize the advantages of the online global marketplace. Others see it as an unwelcome attempt by PayPal to exploit the largest economy in Africa which they previously spurned.
For the benefit of those new to PayPal; PayPal is a globally trusted financial services outfit that provides a platform to facilitate secure payments (and receipt of such payments) for goods and services purchased online (e-commerce) by protecting credit/debit card details during transactions. They also mediate between buyers and merchants to prevent advanced fee fraud (a.k.a 419) by holding the buyer’s payment for goods in escrow until both parties confirm satisfactory delivery of the good.
According to a report by Reuters, Paypal’s addition of these ten countries to their portfolio would result in a potential increase in its usage by 80 million customers. It is interesting that 75% of the target new customers (i.e. 60 million) from the ten new countries added would be from Nigeria.
Why is it news for Nigerians?
It would be recalled that Nigeria was one of the countries restricted (in fact forbidden) from using PayPal’s services due to an overly generalised international perception of Nigeria being a corrupt country swarming with malevolent and scamming predators perpetually scheming wanton wealth takeover of unsuspecting internet users.
Nigerians in diaspora with legitimate PayPal accounts risked having it frozen the moment they returned to Nigeria and attempted to login – PayPal probably identifying the Nigerian IP address. Until recently, this status-quo has no doubt limited honest Nigerian online entrepreneurs and businesses from making the most of e-commerce. They were limited in taking advantage of buying relatively cheaper goods abroad from sellers who only accept PayPal payments. They also could not sell their products/services to international buyers who only make (secure) online payments via PayPal.
In their usual resilience and ingenuity, Nigerian entrepreneurs resorted to several other online payment services to facilitate their e-commerce enterprises. These include Payza, Perfect Money, and home bred Voguepay.
While this sufficed for some, Nigerian enterprises were still potentially alienated from about 148 million active PayPal users (buyers and sellers) worldwide – a vast market indeed.
It is therefore a welcome relief that the embargo on Nigeria has been lifted though not completely. For the time being, Nigerians can only use PayPal services to pay for “goods and services at PayPal-enabled merchant sites”.
This service is free to the (Nigerian) buyer. However, local sellers would be unable to receive payments till further notice. This may result in a negative tilt in the balance of trade for the Nigerian economy. It is likely that this decision was made by Paypal to test the waters, limiting potential advanced fee fraud anticipated from Nigeria. Paypal’s decision might also have been made under the presumption that Nigeria is majorly a consumer economy.
Notwithstanding, it can be argued that PayPal’s move to Nigeria is a cheap or/and desperate way of expanding its market reach by over 40% in Africa’s newly announced largest economy with the largest number of internet users. Noting also that Paypal’s move comes on the heels of the involvement of MasterCard Inc (a PayPal rival), with the Nigerian government to pilot payment technology on a new national identity card; and the enforcement of the CBN’s (Central Bank of Nigeria) cashless policy throughout Nigeria.
It can also be argued that Paypal’s arrival would encourage Nigerians tap into the relative ease and trusted security offered by Paypal for e-commerce. This opens up Nigeria to over 200 million potential clients to buy from or sell to, hopefully in the near future when Paypal enables payment receipt in Nigeria.
Whatever the rational behind Paypal setting up shop in Nigeria, it is a welcome development for the furtherance of e-commerce in Nigeria and a win-win situation for Paypal, Nigerians, and the global marketplace that would now be able to trade with the anticipated 60 million new users from Nigeria.
What are your opinions on Paypal coming to Nigeria?
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