By Fredrick Obura
The increase in the number of Internet users has renewed interest in the financial circles. Banks are scrambling for e-banking and online business platforms.
According to first quarter statistics from the Communication Commissions of Kenya (CCK), new Internet usage continued to rise steadily, to stand at 6. 2 million subscriptions, up from 5.42 million during the previous period.
This represents a 13.48 per cent increase. Internet users rose by 21.55 per cent, from 14.30 million users in the previous period to 17.38 million during the period under review.
The domesticated online payment gateways being championed by the institutions are different from international gateways such as Paypal.
payment costs
Besides raising the cost of online transactions, the use of international gateways to settle payments made locally means the businesses cannot immediately receive the cash and often incur heavy losses in the event of exchange rate fluctuations.
It also forces local consumers to make special arrangements to pay for goods online – a process that has proved time consuming than walking to a shop for a simple cash transaction.
“Internet is growing steadily in Kenya, it could be tapped by tourism, auto, airlines among other institutions to reach out to the global clients,” said Peter Waa, director Paysure Limited.
“We have lost in the global Internet trade due to lack of local solution. It is a reason why banks are now interested in partnership with technology companies to tap into this business opportunity,” he said.
Chase Bank in partnership with Kenswitch and Paysure Limited, launched its first online gateway payment targeting individuals, companies in Nairobi last week.
In the Chase Bank, Kenswitch and Paysure Limited deal, Paysure, an online merchant aggregator will be able to accept cards issued by Kenswitch in over 30 member banks.
The integration of Paysure means Kenswitch cardholders can now make purchases on line using debit or prepaid cards.
Chase Bank acts as the settlement bank for Paysure, which ensures merchants’ payments are secure.
risks involved
This follows the partnerships between I &M Bank and Iveri Technologies. “When we critically analyse online payments offered today, we are able to observe gaps in terms of
bill presentment and fulfilment that needlessly introduces inherent risks,’ said Kenswitch Managing Director George Wainaina. He said such models restrict payments within a closed-loop environment. This hinders a global audience
wishing to partake of goods and services offered by Kenyan businesses.
“Financial institutions like ours are coming in to offer online payments gateway that allows the growing middle class and SME sector, to use debit cards for payments of goods and services. This online service provides an opportunity for businesses to receive payment for their goods and services from anywhere across the country.”
“Local payment platforms away from internationally known gateways such as Pay pal are the only way to promote e-commerce in the country,” he noted.
He said electronic payments currently championed by KCB, I &M Bank and Chase Bank can relieve recipients of online payments the trouble of engaging offshore electronic gateways to receive money.
heavy losses
Besides raising the cost of online transactions, use of offshore gateways to settle payments made locally also means businesses cannot immediately receive the cash and often incur heavy losses in the event of exchange rate fluctuations. It also forces local consumers to make special arrangements to pay for goods online – a process that has proved more time consuming than walking to a shop for a simple cash transaction.
I&M Bank recently launched the first electronic payment gateway in the country after it acquired an e-commerce license from Visa International.
The bank’s Chief Executive Mr Arun Mathur, said a local electronic payment gateway should help e-commerce merchants such as airlines, tour and travel companies, and utility service providers expand their sales globally at significantly reduced transaction costs.
He said I&M Bank was targeting tourism, auto industry, the government and individuals with its payment platform built in conjunction with i-Veri
“The low uptake of e-commerce in the country is thought to be a stumbling block to growth in key sectors such as tourism, where the Internet is the main platform for transactions,” he noted.
In tourism, the application of the technology has enabled the players to offer new and flexible services that are cost- competitive and convenient to consumers such as on-line booking of airline tickets, hotels and transfer services.“Banks should come out in support of various technologies to facilitate online transactions.”
He called on banks to provide their customers with the necessary tools in order to facilitate online payments.
Local financial institutions have been reluctant to establish electronic payment stalling the growth of e-commerce in the country. This has led to the lowest levels of electronic transactions.
