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.


[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.


9 thoughts on “eyowo.com: My thoughts

  1. Well i don’t really agree to this… because:

    1) I don’t see any barrier of entry here, Eyowo is under no competition and i could even say its one and only of its kind in Nigeria and the demand for such a service in high.

    2) They may want to charge setup fee due to fraud factors in Nigeria, where fraudsters are looping around for chances to scam card holders in Nigeria. (needless to say more).

    Referring to your conclusion, if a Startup is not generating any revenue; then it doesn’t need Eyowo billing service? If it does need it, then its profitable or will be profitable.

    1. First and foremost, this post was written from the perspective of a developer who is looking at using eyowo.com

      1. The one off fee of 50K would have proven a huge barrier of entry for prospective developers from using the service. And for the records, eyowo isnt the only one in Nigeria, there are other web startups in the same space.
      2. 50K wont deter fraudsters from using the service, there are other things they can use to prevent fraud. Vetting developers who use their service would be much more better than charging a one off fee and thinking it would deter fraudsters,

      How many startups do you know that are really profitable from revenue gotten from advertising? If they could use eyowo, they could really sit down,really think through their offering and present a chargeable product that could start generating revenue from the first day out. If the startup was already profitable, they could generate more income from charging for their service.

  2. I still don’t think 50k is a barrier, when Interswitch charged 150k setup fee and much higher transaction fee, yet made a record of merchants! This service is coming into a hungry market already…

    Eyowo may not be the only payment gateway that accept Nigerian Cards among many others like VTN, NetNaira and more. But they all require your customers to have account with them and prefund their accounts with their cards before making payments.

    I accept the fact that there are more ways to fight fraudsters, but that could not be only reason they want to charge 50k setup fee. What if they want want to generate some funds on start to cover some budgets?

  3. I’ve told them what I think. The 50k fee is a barrier. It makes good business sense to get as many developers to use them by making it free. They’re not the only ones worried about fraudsters; what if they’re frauds themselves? I agree with Pystar a 100%; especially on the transaction fee.

    1. I think any developer would prefer using eyowo than spending over 150k to integrate interswitch and e-tranzact all of which eyowo is offering for just 50k. Think about it. It’s not a barrier!!

      1. Entry fees are always a barrier.

        If you understand the concept of sales funnels in marketing you will realise why the most painless entry is always the most desirable.

        If there was a free (or even cheaper) alternative that offers similar offerings as eyowo, who would you think 99% of developers would use?

        Why do you think GSM companies now give out virtually free SIM cards?

        In my opinion, Zero or Very low set up fees (like N2,500), a low monthly or yearly subscription (like N500/month or N5,000 per year plus 2.5% transaction fees would work much better and prove far more profitable than the 50,000 model any day.

  4. Mr Mark. Like I said, any reasonable business owner will choose a cheaper system as long as it is working and it meets all requirements. Although the prices have changed (https://www.eyowo.com/support/charges) you would still choose them over integrating with them interswitch and etranzact one by one. Any developer would. Even coupled with other services they offer such as the electronic invoicing. In this case, eyowo’s price is not the barrier.. rather, that of interswitch and etranzact.

    You want them to charge as low as N2,500 for setup and 2.5% transaction fee? Now that’s scaring the business owner away because he is responsible for paying that transaction fee. If he sells his goods for N40,000, he pays N1,000 to eyowo instead of N400 deduced from the current 1% which i think is okay for the service . Think about it again. As a business owner, which model would you prefer.

    Except you would be handling huge transactions per day running into millions, I bet you would prefer to go with eyowo.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s