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e-Commerce, Business Methods and Evaluation of Payment Methods in Nigeria. Author: Michael Adeyeye Department of Electrical and Information Engineering, Covenant University, Ota, Nigeria Presented by: Merlene Headley & Rudi McClean. Introduction.
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e-Commerce, Business Methods and Evaluation of Payment Methods in Nigeria Author: Michael Adeyeye Department of Electrical and Information Engineering, Covenant University, Ota, Nigeria Presented by: Merlene Headley & Rudi McClean
Introduction • Our presentation is a summary of the paper written by Michael Adeyeye. His paper seeks to identify different levels of ecommerce in Nigeria among consumers and businesses. It also evaluates a case study of citizens involvement to identify the best payment solution in ecommerce. We will then provide an evaluation of this paper.
introduction • Definition of e-commerce • Integration of communications, data management and security capabilities allows businesses to exchange information on goods and services • Act of conducting transactions via electronic medium
introduction • Nigeria - a developing nation emerging in the ecommerce market, tapped into the use of m commerce using mobile devices • High risk security issues – need to handle authentication and non repudiation • Note that authentication, confidentiality and trust are driving force ensuring ecommerce is safe • Use of digital signature for authentication and digital signature verification for non repudiation
introduction • Major business models are B2B and B2C • Requirements to conduct ecommerce on the internet: • Online merchant account, payment gateway and mail or web host account and servers • Web hosting solutions – dependent on cost • In house all requirements is controlled by investor • Instant web front most requirements are outsourced • Nigeria mainly use instant solutions
Payment models • Main payment methods: • Digital Cash • Digital wallet which is a plug in to web browsers houses receipts and invoices for payments as well as cash which is withdrawn to complete online transactions • Main advantage - does not need personal details of buyer • Payment is immediate
Payment Models • Credit Cards • The card holder has a revolving credit line which can be used for both traditional and e commerce. • Card has a specified limit where purchases and cash advances are made up to that limit. • Settlement can be in full within a specified period or minimum payment by an expected date • main advantage – available cash when needed • Main disadvantage – high charges applied
Payment models • Online check/ Electronic Transfer • When using online check, digits are entered during the transaction process • Electronic transfer involves a financial clearing house - transfer funds from the originator to receiver • Debit Card • Debit card holder access their own funds from their financial institution, purchases totals deducted • Use debit card payment processing facility • Can only spend what you have, cash payment is immediate • Less charges apply
OTHER PAYMENT METHODS • Micropayment • Allows vendors to sell over the internet at unit prices • Can have amounts as low as one cent • Money Orders • Uses third party to send payment to the receiver • Western union, American express etc • Small cost to process order • Transaction is protected
E-commerce methods in Nigerian banks • Electronic banking • Also known as e banking – Banking services conducted using electronic medium. Include withdrawals , fund transfer, check balances • Virtual Private network (VPN) to connect to other branches • Branches also connected using VSAT - very small aperture terminal; a satellite communication system • Extranet - use internet technologies to share information with its customer uses for data encryption
E-commerce methods in Nigerian banks • Internet banking • Intranet - Internal to the bank where staff has access to required information both customer and operational related • Telephone banking • One branch call another where an account is domicile to confirm validity of an account.
E-commerce methods in Nigerian banks • Mobile banking • Advent of global system for mobile telecommunication banks conduct business using this medium • Phone number becomes bank account number • Transfer funds to other phone accounts • Transact e products like phone top ups etc • Automated Telling Machine (ATM) • Situated in stores and hotels where access to quick cash, make deposits • self service operation
E-commerce methods by online service providers • Web merchants • Conduct business via their websites purchases for goods and services • Prepaid services. E.g. a prepaid card to buy amount of purchases online; also direct payment to seller’s bank consider online method, proof of payment is required • Other prepaid card services home entertainment
Ecommerce methods by online service providers cont’d • Payment gateway providers • Possess card information used online or at point of sale (POS) terminals • Act as an interface to the banking system • Interswitch (Nigeria) • Caribbean Integrated Financial Service Inc. or CarIFS (Barbados & Caribbean)
Evaluation of e-commerce participation by the public • Copies of the same questionnaire was distributed to about 1/5 of the population of approximately 6750 members of a tertiary institution in the suburb of Lagos-State, Nigeria. This 1/5 was made up of students, non-academic staff, semi-skilled workers and academic staff. • Daily newspapers, articles and face-to-face conversation with staff of some of the banks, e-commerce service providers were also used in Mr. Adeyeye’s research.
Evaluation of e-commerce participation by the public • Sample of multiple choice questions used to determine the extent of participation of Nigerians in e-commerce: • Do you conduct transactions on the internet? • If yes, what payment method do you use? • What is your job description? • What is your computer competence level? • Should you want to make a purchase online, what payment method would you prefer.
Analyses • About 84% of the sample does not conduct transactions on the internet even though they are computer literate (Table 2.0) • The 16% that engage in e-commerce do so through direct payments, credit cards and prepaid cards to settle bills • Of that 16% that engages in ecommerce: • 65% use prepaid cards, mostly to check examination results online, buy airtime or renew subscriptions • 25% use credit cards to make transactions (mostly from foreign websites)
Analyses • The most preferred method is the prepaid card system, with 43% of persons choosing it due to its ease of acquisition and use. • 27% preferred direct payment to seller’s account • 18% chose the credit card system as their preferred method • 3% of those sampled didn’t state their preferred payment method (could be an indication that they aren’t aware of e-commerce at this present age)
Interesting facts • Regarding e-commerce, Nigeria has been rated as the highest risk country across the globe followed by Indonesia (Cybersource 2005). • To date, many orders from Nigeria are NOT processed due to the above
conclusion • It was indicated that the most appropriate payment methods for use in Nigeria are prepaid/debit card system and direct payment to seller’s accounts. • The debit and prepaid card methods both ensure that the customer has sufficient funds in his/her account or by buying a card respectively. • Direct payment was chosen by many since there is a reduced risk in terms of fraud • A standard e-commerce system in Nigeria should be set up to ensure that banks with different proprietary technologies can still connect to each other.
Evaluation • Paper was well written, except for a few grammatical errors which made meanings a bit hard to understand • Most of Nigeria’s payment methods can be applied here in Barbados and the Caribbean also • It would be nice to see biometric payment implemented here in Barbados
Evaluation • Difference in services when compare locally: • Internet banking – term definition • Mobile banking – use of phone number for account number • Telephone banking – term definition.
