When I was planning to come to Kenya, I wanted to book and pay for hotel accommodation online. Coming from Israel, I had assumed online transactions had started becoming commonplace. The hotel was not accepting online payments. That was nearly a decade ago.
Until a few years ago, you could call a hotel in Nairobi asking for a room reservation and the common response would be: “Fine, we will keep the room for you for a few hours. Send us the money. Send your driver with a cheque or …” Today, that has greatly changed: When you call most hotels and tell them you want to book a room, they would tell you the cost and reserve the room for you. If you are a card holder, they send you the invoice via email, which includes a link to an online payment page. The hotel then sends you a thank-you email, the invoice and a receipt. Everything is done real time.
Even for airlines, you can make real time website transactions and get your ticket in minutes. There is no doubt that the local online payments market is growing.
It is estimated that Kenya has about 10 million card holders. However, only a few people use their cards for online payments. Some of my friends tell me they go to the ATM, withdraw money and go to Nakumatt and pay for goods in cash. To me, that shows there is a huge potential in the online payments market segment.
At Direct Pay Online, we are processing between $4 million (Sh400 million) and $8 million (Sh800 million) a month. We expect this to triple by 2017. The number of young middle-class Kenyans is growing rapidly. You can see them in the shopping malls where they buy and consume and consume. The 25- to 27-year-olds Kenyan now go to the coffee shop and have no problem using their cards to pay for coffee or using the card to order for pizza on the Internet. In the last three years, the local cards that run through our system have grown about 20 times.
Online transactions in Kenya are driven by three types of customers: First category are inbound tourists mainly from Europe and the United States. They are still the majority and account for more than 60 per cent of online transactions in Kenya. The second type is the typical tech-savvy middle-class Kenyans.They like to go out and buy new clothes. The third type are the businessmen and women in their 40s and 50s.
They are young, classic business managers who travel a lot all over the world. We need to reach a point whereby almost every transaction – be it paying for grocery or taxi – is done online. That is what is happening in the United States and the United Kingdom. Players are taking developments in this sector seriously, especially when it comes to ensuring transactions are secure. To minimise fraud, players have for the last few years been promoting anti-fraud awareness through the annual International Fraud Awareness Week. This year’s event was marked from November 13-19. We want consumers to be aware of all the risks associated with using cards as well as ask companies to present their technologies on fraud prevention.
According to the 2016 Association of Certified Fraud Examiners Report to the Nations on Occupational Fraud and Abuse, organisations worldwide lose an estimated five per cent of their annual revenues to fraud. Common types of fraud include using stolen cards to buy goods; stolen identity (using someone else’s details for transaction); and merchants selling non-existent goods/goods they don’t stock. These are things we try to mitigate all the time using fool proof technology.
Whenever we detect fraud in the making, we raise an alarm and advise the merchant to cancel the transaction. But this industry also needs serious regulation. The government is still not active in the online payment industry. As a company, we brought the regulations on standards (PCI-DSS) from Europe and implemented them.
Currently, there are many companies in the industry which do not adhere to this standard. This means customers may not be safe. The government should put in place regulations like those in Europe, defining how a merchant protects a customer’s privacy (information).
There should also be regulations on reliability of technology – guaranteeing that the services will be up always. It doesn’t make sense that a transaction takes 20 minutes simply because the server was down.