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The techie behind the rise of the online African consumer

FINANCIAL STANDARD
By By JEVANS NYABIAGE | December 24th 2013

By JEVANS NYABIAGE

KENYA: In 2007, the United States of America was slipping into a biting economic downturn. Companies were retrenching staff and moving to cheaper labour markets in India, China, Singapore, Philippines and a few African countries.

Mr Agosta Liko, an astute techpreneur, took advantage of the situation to relocate from the US to Kenya and set up a company that would get a piece of the outsourcing action.

Mr Liko, now 37, started Verviant Consulting Services, a software development company that in six years has developed a powerful online ecosystem. 

His staff spent every working moment developing web designs, software and mobile applications for clients in the US and Europe. The firm quickly established a niche in IT outsourcing.

But the potential of e-commerce in Kenya was impossible to overlook.

When Verviant was launched, Kenya was on the cusp of a technology-fuelled era of economic growth.

That was the year Safaricom and Vodafone partnered to unveil M-Pesa, which has been a game changer in the mobile money transfer market.

Accepting credit cards

Businesses had gone online, but many merchants were not accepting credit cards from Africa, slowing the growth of online shopping. People were willing to make purchases, but there was no local payment gateway, or even the infrastructure for it.

Mobile payments helped Kenyan merchants accept online orders, but traders outside the country had no way of tapping into the market.

However, two years after it set up shop, Verviant unveiled PesaPal, an application that has helped bridge the gap between mobile and electronic payments.

“We ended up building PesaPal to enable organisations accept payments,” Liko told Business Beat in an interview.

Currently, PesaPal is live in Kenya, Uganda, Tanzania, Rwanda and Zimbabwe. It is set to expand to more African countries next year.

With this innovation, Liko’s firm has been among those at the forefront of the growth in e-commerce in Kenya, and Africa.

Today, it is possible to order food, books or merchandise and make payments online using  mobile money platforms, or credit and debit cards. You can pay school fees; book and pay for air, bus or event tickets; fundraise for funerals and weddings; and make rent, insurance and payTV payments without having to navigate long, slow-moving queues.

“What we are doing in all these markets is making it really easy for businesses to accept payments. And when you make it easy for businesses to accept payments, then the consumers can also pay quickly,” he said.

Prior to the launch of PesaPal, merchants in Kenya who wanted to accept credit cards had to set up subsidiary companies outside the country.

They would then register for merchant bank accounts and payment processing services in other countries such as the UK or US. This meant that payments would need to be processed via international services before being remitted to Kenya, leading to higher costs, lower margins and longer payment periods.

PesaPal set up a local payment gateway that eliminated to need for such convoluted manoeuvres.

The platform has more than 10,000 businesses using it, including batakenya.com, yum.co.ke, rupu.co.ke, mzoori.com, and epepea.com.

In 2011, PesaPal for schools was launched in partnership with Safaricom and some banks. It allows students and parents to pay fees directly into school bank accounts, reducing bank transaction fees and eliminating the risks associated with sending money to third parties.

The schools that have linked their accounts to the web-based platform pay about Sh10,000 a term.

PesaPal says it has signed up over 12,000 schools to the service, making it possible for parents to pay school fees from the comfort of their homes.

“We have built a payment ecosystem whereby entertainment is sorted, bill payments are sorted, and school fees is now possible to pay using M-Pesa. We are going through a period of learning how to walk,” Liko said.

To sign up for the PesaPal platform, a merchant pays the cost of a card reader, which is about Sh4,900.

“It will give that small trader in Narok a credit card processing facility so that if tourists come, they just swipe their cards. If you go to your nyama choma joint, you can swipe your card. Whether it is your kinyozi, your taxi driver or any other small and medium-sized enterprises, we want to bring them all on board.”

Payment gateway scene

Other players in the payment gateway scene are JamboPay, Zege Technologies and Intrepid Data Systems (iPay). They have developed software unique to Kenya, making mobile payments faster and viable across different software platforms, including bank systems.

Liko, married with a 2-year-old child, manages a team of 31 employees at PesaPal and Verviant.

He also set up Ticketsasa, an e-ticketing portal where event organisers and goers can sell and buy tickets online using M-Pesa, Airtel Money and Visa.

Started in August 2010, the portal was first used to sell tickets for the vehicle showcase Concours d’Elegance.

Since then, Ticketsasa has taken on more than 100 events, including music festival Blankets & Wine, Safari Sevens rugby tournaments, the Tusker Lite Experience, Heineken Mingle and Countdown, Networking in Heels, All That Jazz, theatre plays and New Year parties across the country.

“The idea around Ticketsasa was that when organising an event, you would have a platform to sell tickets,” Liko said. 

Online ticketing allows event organisers to track sales and money collected, and reduces the amount of cash handled and  heavy traffic at event entrances.

Liko said his focus going into 2014 will be on scaling up his electronic solutions — in terms of marketing, fixing card problems and rolling out mobile point of sales (POSs), targeting the mass market.

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