30 June 2014

The Reality of Paypal's Expansion - Good or Bad News for ECommerce?


Few days ago, I poured out my heartfelt convictions on the intent of Paypal's service extension to Nigeria and nine other countries in Africa, Eastern Europe and South America. It was clear that their intentions were, and still is, very much guided by greed. However, is Paypal's greedy intent a blessing in disguise for some, and a curse for others in these regions? This article examines this.

PayPal Returns: Hard Truths and Blessings

With Paypal's arrogant absence in Nigeria and the other countries it has now finally come back to, many companies came up to provide fairly good payment solutions leading several foreign merchants to accept debit (and credit) cards from Nigeria and these other countries; although some merchants continued to insist on PayPal.

Irrespective of the observed negatives of PayPal restoring operations in these countries, Small and Medium Scale Enterprises, SMEs, in these regions see this comeback as great news presumably because local entrepreneurs starting up their own businesses or online presence had, in the past, encountered very difficult times managing money transactions with foreign, and surprisingly even some local, customers.

Apparently, the big guys in the Payment industry (using Nigeria as a case study) cared less about promoting small entrepreneurs by having the cost of deploying payment solutions for their businesses and on their website or receiving money online at very high cost. Many small time merchants and online shopping ecommerce companies therefore, came to rely on cash on delivery with its many risks.

With PayPal back on ground, however, even though it currently offers only "send money" services to foreign merchants without peer-to-peer transactions enabled locally, many local merchants, especially in the SME sector, believe this is a right step in the right direction and can only get better with time.

They believe they can now go online to sell at very low costs, thus invariably promoting SMEs, and at the same time, this is big bad news for the once-never-caring and exorbitant local Payment companies who will now loose out in the long run. Much as I do not want to celebrate PayPal, their presence appear to be bringing some succor to these SMEs.

The SMEs are all thrilled at PayPal's comeback presence, but what about marketplace e-commerce giants like Kaymu, Jumia, Konga, Dealdey and OLX? Are they also rejoicing with the pack? What is going to be their decision on this issue?

With the latest trend of everyone now chasing marketplace model of buy and sell introduced (into Nigeria and a few other countries) by Kaymu, a copy-model of PayPal’s parent company, Ebay; these giant merchants may have no option but to engage and use PayPal when it's available to them considering the lower cost it affords?

PayPal Returns: A Curse For Some?

In a blog post I recently came across, which discussed the comeback of Paypal, the blogger notes:
Nigerian financial institutions shouldn’t be stressed yet because PayPal has confirmed its business won’t be interfering with their offering. That’s good news for them. Isn’t it?
Come to think of it, is this really good news for the financial industry in, not only Nigeria, but the whole region(s) PayPal has come back to? Aside banks who need to sit up to remain relevant and not loose their customers, there is the case of traditional online Payment providers who have been offering their service at very exorbitant rates, with no consideration of small-time customers who just want to put up a few fashion items for sale, offer a service, or of the young man who wants to sell his old Samsung galaxy s4 phone to get the latest Samsung S5 phone. All these instances should not require one to pay a fortune to be able to sell online which has been the case.

Now, if the truth be told, PayPal currently provides the fastest and easiest mode of payment system, when compared to other online Payment solution providers, and at very low cost too. Millions of diehard loyalist merchants would still argue that the company remain one of the safest too, regardless of the recent security breach discovered on PayPal's mobile platform.

Bearing this in mind, it is not hard to see why companies in the Payment industry in these regions see the re-advent of PayPal more a curse than a blessing. However, whether a curse or not, the good I see that will come out of all this is the greater number of options that will obviously be available to all customers, big and small.

It is obvious that PayPal has come to take a cut in the business of Payment solutions, and compete with existing financial institutions over emerging and remaining Africa's number one eCommerce Payment solution provider! In this sense, atrocious and gluttonous companies in the Payment industry see the re-emergence of PayPal as a curse.

In conclusion...

Many merchants and SMEs believe that although this is going to be a "send only" service at least for now, it is still a first major positive step to achieving more feats in the online payment sector in these regions. These people hail PayPal's move.

No matter how I feel about these state of affairs, and no matter what the initial intent of PayPal was in extending its services to these new regions, the truth remains that the future shines brightly for all consumers and users of online Payment, while the future is certainly bleak for those that continue to abuse consumers.

No comments:

Post a Comment