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

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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.

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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

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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

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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

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PAYMENT MODELS

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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

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PAYMENT MODELSCredit 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

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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

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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 etcSmall cost to process orderTransaction is protected

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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

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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 bankingOne branch call another where an account

is domicile to confirm validity of an account.

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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 depositsself service operation

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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

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ECOMMERCE METHODS BY ONLINE SERVICE PROVIDERS CONT’D

Payment gateway providersPossess card information used online or at

point of sale (POS) terminalsAct as an interface to the banking system

Interswitch (Nigeria) Caribbean Integrated Financial Service Inc. or

CarIFS (Barbados & Caribbean)

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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. 16

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.

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PRESENTATION OF RESULTS

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PRESENTATION OF RESULTS

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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)

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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)

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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

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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.

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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

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EVALUATION Difference in services when compare

locally: Internet banking – term definition Mobile banking – use of phone number for

account number Telephone banking – term definition.

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QUESTIONS, COMMENTS,

QUERIES?

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THANKS FOR LISTENING!

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