Online security constraints stunt Nigeria’s e-commerce potential

Greater security measures and increased supervision by regulators must be employed towards establishing an atmosphere of trust in Nigeria’s growing e-commerce space in order to enjoy the full potential of the industry, observers say.

Industry watchers have also observed that the fear of electronic fraud, which gave rise to the Pay on Delivery (PoD) service to bridge the lack of confidence in the system, is seriously hindering the swift development of Nigeria’s e-commerce, which has a potential value of over $10 billion.

The establishment of the e-commerce industry has taken place as the wider digital value chain has expanded, with the availability and efficiency of e-payments becoming a crucial load-bearing segment. There has also been a rise in the number of firms providing these services in Nigeria and the value of e-transactions recorded in 2015 hitN48.93 trillion, up by 11.6% from 2014.

Speaking on lack of trust in Nigeria’s online payment services, Gideon Ayogu, head, Corporate Communications at Yudala, told BusinessDay in a telephone interview that most customers still opt for the pay on delivery option, even with improvement in e-commerce.

“This is understandable, considering the fact that the e-commerce evolution is still at a nascent stage in the country and trust remains a major issue. This option currently accounts for over 80 percent of sales; it is also responsible for the highest proportion of returned items, especially since the customer knows he can simply reject the item,” he said.

According to a recent white paper report by africapractice, “inadequate levels of awareness, poor banking culture, lack of trust and love for the status quo have all been blamed as responsible for inhibiting the industry from experiencing a more significant rate of growth.”

Various arguments have risen on the issue of payment inadequacy, where customers on online retail platforms like Jumia, Konga, Deal Dey, Kaymu, Payporte and recently, Yudala and the likes have insisted on either paying cash on delivery or having the retailer bring the PoS machines physically to the point of delivery for the payment to be made by card in order to bypass any hitches attached to paying online.

Bimpe Adekunle, founder of Yahnvi, one of Nigeria’s e-commerce retail stores said, “an adoption of advocacy methods supported by favourable government policies could help customers feel more secure when paying for goods and services online.”

Following the rise of electronic commercial activities in Nigeria and its contributions to the growth of the economy, stakeholders have long been agitating for policies and regulatory framework that will aid continuous growth and orderly conduct electronic transactions in a manner that will be beneficial to both sellers and buyers.

With over 83 million Internet subscribers in Nigeria, the country has become an attractive hub for both local and foreign online businesses, which has contributed in making it Africa’s largest economy by GDP, analysts say.

Experts therefore, suggest that better communication between consumers, producers and the government can significantly reduce the trust deficit.

Across several developed countries, an emerging trend used to increase trust in e-commerce are trust seals that are simply emblems or badges from a reputed player in the market identifying that the website displaying the seal is legitimate. Although, this has not been fully adopted by e-commerce players in developing markets such as Nigeria, analysts say it might be a useful approach to adopt these certificates of trust as they offer a guarantee regarding reliability and trustworthiness of an e-commerce site.

JUMOKE AKIYODE