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E-commerce growth of PayPal in Africa

PayPal is a secure consumer and merchant payment service removing concerns about security or logistics – Efi Dahan, regional director for Africa and Israel – PayPal.

SIKI MGABADELI:  We are focusing now on e-commerce on the continent, looking at where things stand and the potential growth for this market. We are speaking to PayPal about their presence here, how they find the market and what their plans are for the future.

Efi Dahan is the regional director for Africa and Israel at PayPal and joins us now. Efi, thanks so much for your time today. Africa – why does it make sense as a market for PayPal?

EFI DAHAN:  Yeah, Africa is a very important market for us. We started our journey in 2010 here in South Africa, and so far we’ve managed to open 43 countries across sub-Saharan Africa for PayPal services, and we are very happy with the result. We have learned a lot about the market. The potential is huge. Some markets like Nigeria, South Africa and Kenya are fast-growing markets in terms of e-commerce.

In South Africa itself, the total e-commerce spend by consumers here in this market is R37 billion this year, which is almost 30% higher than last year. So it was very fast. Just to give you a benchmark, Western European markets are growing at 10, 12% year on year. [Overtalking.] Other people are joining. We have in PayPal 600 000 active accounts in sub-Saharan Africa, which is huge, and we are growing very fast.

SIKI MGABADELI:  What do you think the interest is? What are people using their PayPal accounts for?

EFI DAHAN:  First of all, I think thanks to the internet people realise that there are no more borders. Whether you are a small business or a big business, you can sell much more internationally.

If there are a few concerns about security, about logistics, if you are a buyer, PayPal can help a lot for the consumer and the merchant, as an example, if I have a problem with logistics. This is the main concern – what will happen if I buy something and am happy with the price, but I haven’t received it, or I received what was not described, PayPal will give you your money back. You have 180 days to open a dispute on PayPal and we will approach the seller and give you your money back.

And also an interesting service we just launched lately, which we call the refund and return service. As regards the reason, if you buy a shirt or something and you want to return it, PayPal will cover the cost, which is completely removing one of the top barriers…

SIKI MGABADELI:  Which is one of the big concerns because security is a big concern. We know cybercrime has been on the rise.

But let’s talk a little bit about marketing PayPal itself, and promoting e-commerce on the continent. What are some of the challenges that come with that?

EFI DAHAN:  By joining the PayPal service as a merchant you get access to 184 million active accounts in more than 200 markets. It’s a lot, a big value for a small business, for any business, to be exposed to this number of consumers who are eager to buy with PayPal. Based on our experience, 30% of the consumers said that they would never buy without PayPal.

If I am a small merchant and no one knows about me in the UK or the US, but they see PayPal as a payment method, they pay fast and easily.

SIKI MGABADELI:  And they know that they can easily access that. It’s something that they are familiar with. So it’s familiarity with the brand.

EFI DAHAN:  For the consumer we happen to be connected to more than 40 million merchants. And again, PayPal is in the middle. PayPal knows about the transaction history of both sides – merchants and consumers, and we are in the middle. This is why we can easily approve good transactions and relatively easily block bad transactions and, most importantly, to let a transaction that looks like a bad transaction, but is good, go through. This is the advantage that PayPal can make because we are in the middle and we have the picture.

And from the day we established PayPal, 1998, we started to develop the most sophisticated anti-fraud and risk modelling tools to improve the service.

SIKI MGABADELI:  Okay. So for merchants in South Africa who sign up to PayPal and want to use that as one of the payment methods for their consumers, what sort of penetration do you have on the continent?

EFI DAHAN:  I cannot show you the numbers, but it’s very high penetration. We are growing very fast. For the merchant we can bring a lot of value. First of all, we can approach those consumers who will never pay without PayPal.

But the most important thing, in the e-commerce business you invest a lot in marketing. You want to bring traffic, you want to reach potential buyers, but you want to make sure that a high percentage of them will complete the process and buy. And with PayPal the process is much faster. For example, you don’t need to type in the 16-digit credit card. We have recently launched a service called One Touch. With one touch you complete the transaction.

SIKI MGABADELI:  Please explain how that works – biometrics?

EFI DAHAN:  You just pay on the button “Buy” and you don’t need to enter your user, you don’t need the password. Think about consumers today, by the way – at least 40% of the transactions or even more than that in some verticals, are done via mobile devices. If I ask you to enter your credentials and then the expiry date, and then the shipping address on your mobile device, a lot of people will drop off from the process. With PayPal you just select the item, press the button “Buy” and that’s it, done.

So it’s much faster and this brings the merchant more value, more volume, more transactions, more revenue.

SIKI MGABADELI:  Okay. Tell us about your relationship with First National Bank, FNB, here.

EFI DAHAN:  We started this successful relationship six years ago and FNB is a great partner for us to approach all the merchants and to help the merchants to easily withdraw the money from the PayPal wallet to any local bank in South Africa. And also you can top up, from the FNB bank to [a] PayPal account, money in order to use it.

And also we extended the service a couple of weeks ago, and we launched the service together in Botswana. We are planning to expand the partnership to do more and more business together. So we are very happy to have one of the leading banks here dedicated to the PayPal service on the ground.

SIKI MGABADELI:  Okay, we’ll leave it there. Thanks for your time, Efi Dahan.

Source: www.moneyweb.co.za

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