THE CEO INTERVIEW: Cost of managing cash in Nigeria too high – VoguePay Boss

(Last Updated On: July 26, 2016)

Michael Simeon is the Chief Executive Officer of VoguePay, a payment processing firm operating in Nigeria and the United Kingdom. He tells Tunji Abioye about the numerous challenges associated with e-payment in the country 

As a player in the e-payment market, what are your thoughts on the cashless policy introduced in 2012?

The cashless society is not only a policy but an enabler policy. I think it is brilliant. In my view, I think the CBN hasn’t gone further enough because if you look at the cost of managing cash in this country, it is quite high. Consider the percentage of business people who are still carrying cash. You just need to sit down at the petrol station and see a world of cash there. Everyone carries cash around and makes us a bit little backward.

I travel a lot and I go to many places both within and outside our own continent and I haven’t seen people carrying cash at the pump stations. Apart from the fact that it opens people to risk in terms of security, it spreads diseases. If you look at our money, these old monies are supposed to have been burnt.

Don’t you think that the cashless policy is moving as fast as expected?

One obvious reason is that the government, by nature, has the habit of only dealing or engaging with big companies. Big companies, whether big banks or others, are not in a hurry. They are very conservative. They are not agile and flexible because they are dependent on legacy systems. Some of our banks depend on programmers in India. Before they get authorisation and approval, it becomes proceedings. As a result, it is like you are trying to turn a massive trailer. That is not the best way to change things.

There are over one billion companies which only started about four years ago. Facebook was designed in 2005. Banks are not in the business of disrupting because whose market are they going to disrupt? Whereas our government is designed to speak with big banks rather than speaking to medium size energy-driven companies to get things done fast and efficiently. Those are the kinds of challenges we have. Moving forward, we will keep advising them as you need to speak with people underground and around.

How can financial theft be addressed in Nigeria?

We have experienced system attacks with very low success rate compared to industry figures. This is as a result of our investment in security and with our privilege in working with agencies like the FBI and the CIA. I think the challenge in Nigeria is that we compromise too often on standards. Even with all the frameworks we have put in place, we still back it up with insurance. But what tends to happen in most cases, in banks, is that someone in the bank has compromised and acts as insider.

We are also collaborating with other industry stakeholders via knowledge sharing. This includes taking steps towards working closely with them to have a reporting system among the processors, the security and the legal system.

What challenges have you noticed in the payment sector in Africa?

There is an obvious dearth of financial engagement within Africa, between Africans and the world at large. For example, most debit/credit cards issued in most African countries are not cross-continent and some are not even Internet-enabled; thereby limiting a large group of people, regardless of class from participating in cross-border fund transfers and transactions. Another major challenge we realized was that it is difficult to do business with the rest of the world. For example, it is easy to buy from overseas using PayPal, yet many Nigeria businesses that want to sell do not have a trusted financial platform to accept money from the international audience. That was one of the needs we built VoguePay to solve. To solve this market gap, VoguePay focuses on processing payments for business-to-business (B2B), business-to-consumer (B2C) and peer-to-peer (P2P) markets. This market audience cuts across religious institutions, schools, non-governmental organizations, brick and mortar businesses.

Another challenge is online fraud. We believe that international and local payment processors are not directly catering to people in Africa due to their lack of understanding of the diverse cultural elements of doing business in the continent, especially the high fraud rate. For example, most international payment gateways offer a single swap for transaction which makes it highly susceptible to fraud as there is no second-level authentication required for transactions to take place.

When talking about e-transactions, what is peculiar about the SME market segment?

You will notice that the adoption of e-Commerce has accelerated online payment and many businesses are springing up to tap to this opportunity. While it is promising, small businesses cannot afford the integration cost of primary gateways, which is currently at $682 (N150, 000) per gateway. With the cost of development added, many SMEs will be set back by $1,500 before launching e-Payment on their websites. The impact of this imbalance is severe to small businesses in Nigeria and Africa in general.

That is why we are focusing on helping SMEs power their online payment infrastructures by offering free online payment integration; the estimated market audience is 20 million. We are enabling international companies to tap into Africa’s vast market by providing the capabilities to collect, convert and repatriate in one single sweep. We are at the frontiers of international trade and provide fund transfer services by collecting payments in local currency and paying out in major internal currencies

What is the place of collaboration in the fight against cyber frauds?

On security collaboration and advocacy, we are helping security agencies deal with online fraud at a global scale. For example, our fraud control team has identified a pattern of criminals bypassing the card issuer’s authentication system by spending multiple small value transactions across different geographical locations. These go without investigation by the cyber-security authorities due to the small transactional values involved. However, collectively this represents high-value cyber-fraud, especially for small businesses.

Because of this, there is need for collaboration among payment processors, card-issuers and security agencies in terms of reporting and investigating incidents and apprehending perpetrators. That is why we are championing stronger cross-continental collaboration between payment processors, card-issuers and security agencies in reporting and investigating incidents and apprehending perpetrators. For example, a criminal gang wanted to exploit the lack of cross-country coordination when it comes to fighting cyber-crime by using a card issued in the United States to perform transactions on a website that is powered by VoguePay in the UK via a merchant in China. The majority of victims are the owners of small businesses that don’t have the resources or capabilities of larger companies to absorb such losses. This is where we play a crucial role to Voguepay’s users, helping to prevent and deter transactions that could prove to be fraudulent.

How can we use technology to reduce fraud? What is your advice to Nigerians so that they don’t fall victim of e-fraud?

We need to put things into professionalism. If you carry out a research and see how many people are getting robbed while carrying cash in this country, you will come to the conclusion that people are losing more money through cash carrying than what they lose online. If you compare the two, there is no doubt that the online fraud issue is a challenge to everyone. It is not only unique to our country or our continent, it is worldwide.

Users should take personal responsibility not to disclose their card details to avert frauds exploiting this confidential information. We have noticed cases of unauthorized usage of cards within families and co-workers. Also, when you are creating pins, always try to include a symbol so that it is not just words or mere numbers and include a symbol in your password. You have to be very careful where you use your card online; a major culprit is public café. Finally, when you get those fishy emails, be extremely careful. Don’t click on any link if in doubt.

Security is the key concern in online payment. How does your payment gateway check against online frauds?

VoguePay deployed four pillars of security framework that include anti-money laundering, buyer and seller protection programme, security of our platform and collaboration with other industry stakeholders.




Cost of managing cash in Nigeria too high – VoguePay boss

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