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Tackling New Challenges In Online Payment in Africa

If You could remember that one time you wanted to make an online payment and you received an error message, Well we have all been there.

The struggles of cross-border payment is a hurdle virtually most Africans face, How then can we scale this hurdle?

This piece will give you an insight into how we can tackle the online payment issues in Africa.

  • What are Online Payments?
  • Online Payment Landscape In Africa
  • Major Challenges That Come With with using online payments in Africa
  • Minor Challenges of online payment in Africa
  • Addressing These Challenges 

What are Online Payments?

What are Online Payments?

Online Payments are electronic mediums by which people transact goods over the internet this is usually done over the internet.

Online payments are often used for e-commerce transactions, but they can also be used for other types of payments, such as utility bills, rent, and other regular expenses.

Challenges That Come with Using Online Payment in Africa?

Challenges That Come with Using Online Payments in Africa?

Online payments can be an important tool for economic development in Africa, as they can help to increase access to financial services and facilitate trade and commerce. Some specific benefits of online payments in Africa include:

  1. Increased access to financial services: Online payment platforms can provide people in Africa with access to financial services, even if they do not have a bank account or access to traditional financial institutions. This can be particularly important in rural or remote areas where access to financial services may be limited.
  2. Improved convenience and speed: Online payment platforms can make it easier and faster for people to make payments and transfer money, as they can do so from their own devices rather than having to visit a bank or other financial institution in person.
  3. Increased security: Online payment platforms can provide increased security for transactions, as they typically use secure encryption and other measures to protect personal and financial information.
  4. Greater financial inclusion: Online payment platforms can help to increase financial inclusion by providing people with an alternative way to access financial services and participate in the formal economy.
  5. Enhanced economic growth and development: By facilitating trade and commerce, online payment platforms can contribute to economic growth and development in Africa. They can also provide a new source of revenue for businesses, which can help to stimulate the economy.

More Challenges That Comes With online payment in Africa

The two major new challenges of online payment in Africa were the following:

· Bank dollar spending limit.

· Shutting down of virtual dollar MasterCard.

Bank dollar spending limit.

At least two of Nigeria’s biggest commercial banks have recently placed $20 monthly limitations on international transactions made with naira debit cards.

And many other banks have completely stopped offering these services.

This comes at a time when, despite the recent spike in global energy prices, Africa’s largest economy and top oil exporter is still suffering from a long-standing lack of foreign exchange.

Online transactions charged in US dollars can be paid for by Nigerians using their naira-denominated debit cards. At the present exchange rate, debits are made from their naira accounts for every purchase.

Customers’ previous ability to use their naira cards to make purchases online up to $100 has been reduced, according to emails given to customers by GTBank and United Bank for Africa (UBA).

Shutting down of virtual dollar mastercard.

Before we continue, let’s quickly define a virtual card.

A virtual card functions exactly like a physical debit card. It allows you to purchase anywhere and make any payments you desire. Yes, it is quick, secure, and simple to use. In addition to the characteristics mentioned, the main distinction between your plastic card and a virtual card is that the latter is not physical.

Due to the imposed transaction limits on plastic debit cards, virtual dollar cards were used. They have been selected as more practical transactional media in the majority of African nations.

The first of many Nigerian fintechs to crush the hearts of tech-savvy Nigerians was Barter by Flutterwave when they withdrew its virtual card service. “Effective Sunday, 17th July 2022, all our Virtual Dollar cards will be inaccessible for all transactions and purchases,” Barter wrote in an email to users. A “update from our card partner, which will result in the card service being unavailable for a prolonged period of time,” is what the statement blames for this unavailability.

Minor Challenges of online payment in Africa

There are several general challenges that can also affect the adoption and usage of online payments in Africa. Some of these challenges include:

  1. Limited access to reliable internet: Many parts of Africa have limited or unreliable internet access, which can make it difficult for people to use online payment platforms.
  2. Limited access to financial services: Many people in Africa do not have access to traditional financial services, such as bank accounts and credit cards, which can make it difficult for them to use online payment platforms.
  3. Limited trust in online payment platforms: Some people in Africa may not trust online payment platforms, due to concerns about security and the risk of fraud.
  4. Limited awareness and understanding of online payments: Many people in Africa may not be aware of online payment platforms or may not understand how to use them, which can limit their adoption.
  5. Technical challenges: There may also be technical challenges with online payment platforms, such as website downtime or difficulties with payment processing.

Addressing These Challenges

Overall, overcoming these challenges of online payments  will require efforts to improve internet access, financial inclusion, and education about online payments in Africa.

To address these challenges, there are a number of steps that governments, businesses, and other organizations can take, including:

  • Improving internet connectivity: This can involve investing in infrastructure projects to increase access to the internet, as well as promoting the use of mobile internet technologies.
  • Promoting financial inclusion: This can involve working with financial institutions to provide access to banking and other financial services to underserved populations.
  • Collaboration: By working together with other tech/payment businesses, it will be possible to put issues like the dollar spending restriction and the suspension of the dollar mastercard in the past. The inclusion of Africa in the global economy will be advantageous for the entire world.
  • Supporting the development of e-commerce: This can involve providing resources and support to businesses to help them adopt e-commerce and accept online payments.
  • Improving security and fraud prevention: This can involve investing in technologies and practices to secure online payment systems and reduce the risk of fraud.

Online payment will be easy and trouble-free with the investment made in addressing the problems.

John Adebayo
John Adebayo

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