eyowo.com: My thoughts

I have always said that the number one reason why the Nigerian tech industry is still in the doldrums is because of the lack of a proactive e-payment gateway. So I was extremely excited to hear about a new e-payment service called eyowo.  It’s exciting because it allows developers to provide pipes to the major e-payment processors in the country i.e. Etranzact, Interswitch and MasterCard all in one location.

For their business model, they charge a 1% transaction fee, which is pretty low, but my only grouse is their one-off integration fee of #50,000. To the developers who might be able to afford it, it’s not expensive but to other who might not, its extremely prohibitive. for me, i would advise that the fee be scraped[1] for the following reasons:

1. Barrier of entry: This one-off fee would probably be the number one and major reason why most developers or interested parties wont sign up for their service.  For a new company with no track record, they should make adoption of their service as painless as possible and scraping the sign up fee is one way to do it.

2.Economy of scale: they should focus on getting as many adopters as possible. if they drop the one-off fee and increased their per-transaction fee to 2% or simply dropping the per-transaction model entirely and adopting an overall transaction fee of 2.75% similar to Square’s model, it would still make economic sense because the more adopters they have, the more transactions they would process and they more revenue they would be able to generate via transaction fees.

Right now, I am very excited about eyowo’s  service and would be keenly watching how it goes with them.

Notes

[1] Most starts ups here in Nigeria are probably generating little or no revenue talk less of even being ramen-profitable. So every single penny counts to them. So the very idea of splashing such an amount on integrating a payment gateway might not seem such a wise one. But if it was free??? then adoption rate would shoot through the roof.

Disclaimer: I am in no way involved with eyowo.com.

Hey guys….please do me a favor. STEAL THIS IDEA!!!

I just heard that the Central bank of Nigeria recently awarded licenses to 8 new additional mobile money operators bringing them to a grand total of 24 (if so many licenses are being given out, maybe I should just apply for one). On a serious note though, I would be extremely hard pressed to name any of the 24 apart from mypaga which to me has been a very big disappointment. To me, these guys are somewhat bereft of ideas, so I have some questions to ask the “24 wise men of the mobile money industry”  which I hope would get their creative juices flowing.

1. My Phone or My Wallet: Why cant my mobile phone be turned into my wallet? that would allow me use my mobile phone airtime to buy stuff both on the web or offline i.e. in the real world? In other words, why cant I go to a site xyz.com, select stuff I want to buy, check out and be presented with a payment option where I can enter my mobile phone number and PIN and have the total cost of my purchases deducted from mobile phone airtime? So whenever I load credit on my phone, it would be the same as funding my account without actually having an account. Or why cant I go to a local market buy stuff and send a text containing my phone number, PIN, cost of what I bought and the traders phone number to my mobile money operator and have the trader’s account credited with the cost of what I bought? This idea would require you hobnobbing and doing some serious ass kissing to the major TelCos. Nigeria is going to go cashless, whether you guys like it or not, so the earlier you jump on the train with real innovative solutions the better, because that man called Sanusi “wont back down”.

2. eCommerce for Dummies: Since you guys are untested without a track record and your sector is new, it would make much sense if you make the barrier of entry as low as possible to website owners, eCommerce merchants and other people interested in using your solutions. And please scrap the dumb idea of charging a sign up fee, think solely of transaction volume, i.e. charge a cut on each processed transaction, so the higher the transaction volume, the more revenue rolls in. This business model could be likened to a company that gives out shaving sticks but charges for shaving blades or makes its printers free but sells ink and toners. The bottom line is you getting your foot into the door and taking the whole process from there.

I know you guys came into the market on the premise of doing money transfers and the likes, but there are now 24 of you, would it really hurt if just one of you could really be creative and turn the whole industry on its head by tweaking a little the terms of your license by offering a web payment gateway? Since the “big for nothing, monopoly seeking” companies like INTERSWITCH et al have been caught napping in that aspect? The sector is in dire need of innovation and is the number one reason why Nigeria’s tech industry is still in a comatose state.

P.S: I had an interesting conversation with someone today and he asked me a thought provoking question:

“If you implement something like Paypal here in Nigeria without a CBN license, would they send you a ‘cease and desist’ or would they just arrest everyone involved and throw them into jail?”

So, CBN Guv….what would you do if a train of young unlicensed tech innovators ran head first into this sector? what would you do? what???