Deezer’s Got Their Hands In My Wallet, And Online Payments In Nigeria Are A Total Clusterfuck

Last week — or last year, whichever you prefer — I wrote about what I’d learned about conversion funnel optimation from patronising bluehost. This post is also about conversion. Only this time, it’s a lesson I’ve learned from Deezer, a global music streaming service that’s a lot like Spotify, except that it’s available in over 160 countries.

When Deezer became available in Nigeria last October, I was one of the first to signup. After the 15 day trial period expired, I decided I liked the experience enough to continue “testing” it with a premium subscription. It cost just $2.49/month, so I put in my credit card details and put my headphones back over my ears.

I had a vague sense in the back of my mind that I needed to turn it off if I didn’t want to be billed the next month. But somehow, I never quite got around to it. When the bank finally notified me that $2.49 had left my account, I was mildly surprised. But guess what? I didn’t really mind. I was like, “yeah? okay.” It’s not a lot of money…and there’s no harm in enjoying all the music I can stream for another month, is there?

Now let me tell you another story. A few weeks ago, I stumbled on my now abandoned Spinlet app, and a twinge of guilt made me load it up again, just to see what was going on. When I tried to play some of the music that I’d downloaded previously, the app announced that my subscription had expired. I would need to re-subscribe. I promptly exited the app, and that was that.

That incident, together with how my Deezer subscription automagically renewed itself that first time has made me understand the role that online payments infrastructure plays in the psychology behind taking people’s money. I’ll explain my thinking.

Our foreign businesses and startup counterparts have many advantages. But the advantage in payments is particularly crushing. Because the infrastructure and regulatory framework around their payments allows merchants keep credit card information for future use, they can practically keep their hands in their customers’ pockets. They can take their money every time it is due without —

1. bothering the user and risking a change of mind.

2. interrupting the service, which could annoy the user and lead to a cancellation.

The problem with having to directly ask a customer for their money every single time is that every single time, you also trip a psychological trigger that makes them stop and ask themselves — “why the hell do I pay for this anyway?”. They might think it is worth their money, and pay…but there’s also a good chance that the evaluation might not resolve itself in your favour.

Happily for startups abroad, their payments infrastructure makes it easy to mitigate that risk by reducing the friction in the process to the barest minimum. If you’ve previously bought something on a site, all you need to do is click “checkout”, and you’re done. If it’s a subscription, your subscription renews automagically until you cancel.

In comparison, online payments in Nigeria is an absolute clusterfuck. I mean total jagbajantis. Acquiring the means to collect people’s money in the first place is a tale of woe and sorrow. And even when you manage to integrate payments into your product/platform, the customer has to bring out their credit card every single time they want to give you money. It’s so much work for the customer that a good number of them will invariably fall off at that point. Not because they don’t like the service. Not because they can’t afford it. But because it’s just so f**ing hard to pay.

Like most foreign startups, Deezer only has to worry about scoring that first crucial conversion. After that, they’re mostly home free. They simply devote their energies to making the subscriber happy enough that they don’t consider cancelling. But a startup here has to convert in January, February, March…basically everytime he has to ask for his money. As if there aren’t enough things a Nigerian startup has to worry about, they also have to worry about customer attrition at the point of sale. The only reason why I don’t use Spinlet is because the very act of paying is an irritating chore. How sad is that?

There’s a lot I don’t understand about Nigerian electronic payments. So far, asking the players involved only leads to more confusion. You’ll likely get sucked into their negativity distortion field — the stale run around about how the regulatory framework isn’t adequate, or how the CBN isn’t co-operating. It’s not like a more sensible way to do this online payments thing hasn’t been invented —  somehow we seem intent on savoring the economic masochism of the way we’re currently doing it.  While we’re all busy blowing grammar here, Nigerian startups  are dying simply because they can’t efficiently accept money from otherwise willing customers. They can’t accept money.

On the 14th of this month, Deezer will dip their hands into my wallet and make off with another $2.49. And I will like it. Spinlet, on the other hand, isn’t likely to get another cent out of me anytime soon. It’s not their fault. But it isn’t mine either. If someone knows what bodmas we can use to solve the jagbajantis of online payments in Nigeria, they should kindly share with the rest of the class.

 [image via Flickr/Mike Schmid]

 

35 Comments

  • Reply January 3, 2013

    Onye

    Bankole. The answer is http://www.virtualterminalnetwork.com or vcash.com

    • Reply January 3, 2013

      mukoshy

      Are you kidding me? we’re talking about card payments here, VTN is another even longer process of payment for the users.

  • Reply January 3, 2013

    mukoshy

    I think Interswitch and Etransact just have to open up their systems for developers to tap into credit/debit cards. It irks me every-time I remember the kind of seamless payment integration Stripe (USA) offers to developers on card payments.

    This is so sad for Nigerian developers.

    • Reply January 9, 2013

      donnie

      Its actually simple, “if you can’t beat them skip them”……I think Nigerian developers need to stop whining about the fucked state of interswitch and the payment system in Nigeria ….almost all debit/credit card support mastercard, visa e.t.c just power your startup by syncing with an international merchant……its 2013 you know! stop complaining start acting!!…………plus these merchant help with PCI compliance

      • Reply January 9, 2013

        mukoshy

        I thought the quote is “if you can’t beat them, join them!” and that’s why developers have no option than to use interswitch and etransact as it is.

        You think developers in Nigeria can use international merchants? Nope, 99% of them won’t accept Nigeria. For the few that does, settlement is a pain.

        I personally have tried contacting a number of the international gateways providers and they won’t accept merchants from Nigeria. Authorize.net, PayPal, Amazon, Google Checkout, Dwolla, Stripe, Braintree, WePay… None!

        • Reply January 9, 2013

          Bankole Oluwafemi

          Wow. 🙁

        • Reply January 9, 2013

          upnepa

          LOL Try getting SSL certification. Funny process

          • January 9, 2013

            mukoshy

            @upnepa SSL is not a big deal, GigaLayer can issue you SSL Certificate in 24hrs. 😉

          • January 10, 2013

            upnepa

            Oh nice

        • Reply January 9, 2013

          donnie

          When did you try?………bcos am currently using authorize.net…am only aware of google checkout….maybe you should try again

          • January 9, 2013

            mukoshy

            That’s not possible… Authorize.net does not accept Nigeria unless you found your way to breach their terms of service (The Nigerian way)

            Here’s my call with the Authorize.net Representative in the US:
            https://soundcloud.com/ahmad-mukoshy/call-with-authorize-net-5-17pm

            Thank you.

          • January 9, 2013

            donnie

            Dude it is,…if you have relatives domiciled in the Us or Canada,just request taxid and card info….You’re done!!

          • January 9, 2013

            donnie

            ^^^^^^^Thatz one way!…send them an email containing your source code( a mini tech C.v)…it took about 5dayz..buh they wud let you in

  • Reply January 3, 2013

    Ocubed

    Don’t forget too soon that a larger % of the banked Nigerians are not comfortable putting their card details online, let alone storing card details at merchants. The payment companies may understand this consumer behavior and thought it wise not to put too much effort into development of what will likely not be used. Voucher schemes are the way forward going by local realities, a local payment startup presently have this in development and would be launching soon, watch out for it!

    • Reply January 9, 2013

      Ekerete

      The merchants typically don’t hold the card details, the payment processors do (in this case InterSwitch). I’d say we’d be be ok with that considering we already give them the details every time we pay (and they probably already store all transaction details for audit reasons anyway).

      • Reply January 9, 2013

        Bankole Oluwafemi

        Exactly…been reading up on PCI DSS requirements, vaults and tokenisation and stuff, and I’ve come to the conclusion that Interswitch could make everyone’s lives easier…if they felt like it.

        • Reply January 9, 2013

          upnepa

          Apparently, it’s not just Interswitch. It’s a CBN/EFCC directive. They think not allowing you save encrypted tokens/passwords will promote ‘fraud’. Like they think withdrawal and deposit limits will stop fraud.

      • Reply January 9, 2013

        mukoshy

        I think they’re scared, considering the online scam and fraud rate in NIgeria. But until they face the challenge, they’ll be doomed by hiding!

  • Reply January 3, 2013

    Paul C. Eze

    Auto-renewed (or subscription based) online payment has certainly given me some headaches. I dare say that if the players in the finance and online payment sector break open the doors for developers to get their ideas out it could be the beginning of a deluge of startup prosperity in the country. I know a couple of startups that can immediately start benefiting. The concept of having to win over your customer every other month is frightening

  • Reply January 5, 2013

    Lordbanks Weekly - No 2

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  • Reply January 27, 2013

    Victor Asemota

    I was torn between responding here as a comment or responding as a blog post to dispel your perception about the “negativity distortion” around payments in Nigeria. I am writing another blog post on the perception of payments in Africa in general which would adequately address that.

    The first problem is that we are not seeing the real issue with payments but prefer to play victim and look for a saviour when we already have the solution but failed to scale it. The solution is collaboration and it is sadly nonexistent in the Nigerian and maybe African startup dictionary.

    When Konga launched, there was a little feature in there that I praised but which never caught on and it was the fact that they had their own wallet where you store value to reuse without putting your card details in the next time. Yes this may mean tying your money down but what if that same wallet could also be used for Jumia or Spinlet? I guess nobody ever thought of that and a find a way to keep the float amongst the merchants or keep the float for the online merchants without waiting for Interswitch or the CBN. This is about storing value and not storing card details.

    You can approach it from another angle to solve a problem when the regulators provide a contraint. It was the very reason I almost cried here: http://asemota.posterous.com/the-alternate-universes-of-nigerian-payments-62601 when the CBN changed the rules on stored value cards. The rules may have changed but the option is still there and merchants can decide to collaborate with deposit taking institutions to make this happen the question is who will bell the cat?

    MCX in America is an initiative by merchants and not by any payment company or a single startup and why cant it happen in Nigeria or Africa?

    We really need to start thinking differently

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  • Reply November 29, 2013

    mich22

    I think someone made the points in this whole forum here the solution to payments in Africa is that we come out with a platform which is not controlled by the big boy in town so that we could brief a better air… that is all to me.

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