Flutterwave store, Paystack Commerce and other Fintech e-commerce solutions may be dead on arrival. Here's why:

Flutterwave, Paystack and others have recently launched e-commerce platforms for small businesses. I fear these platforms will fail if they don't address this one main underlying issue:

Over the past few years, we’ve seen a dramatic rise in digital commerce. Consumers increasingly want to buy online, but there’s still a major gap between the percentage of consumers who search for items online and the percentage of consumers who actually buy.

Consumers have real concerns when buying online -- concerns about buying across borders, transacting on mobile devices, making high priced purchases and buying from unfamiliar merchants.

 A lot of consumer concerns stem from a lack of trust when buying online and this is particularly harmful to small businesses.

Lack of trust when buying online is a global issue and not just a Nigerian e-commerce problem.

According to a recent IPSOS study* of people across the US, UK, Germany, Australia, Italy, Spain and Brazil, consumers are 54% more willing to buy when a business accepts PayPal, especially in unfamiliar situations and 59% of users have abandoned a transaction because PayPal wasn’t there.

PayPal accepted on a site can increase consumer willingness to buy; higher uplift in challenging scenarios e.g. mobile, cross-border, high ticket, unfamiliar brands.

PayPal brand halo effect also occurs among non-PayPal users, most notably for less familiar brands:

59% of PayPal users have abandoned a transaction because PayPal wasn’t there

PayPal demonstrates superior performance versus other payment methods against features consumers state as most important for payments:

The study also found that when comparing credit cards, debit cards and all other relevant digital wallets, PayPal is the most preferred payment method by consumers. At the same time, 59% of people who use PayPal said they have abandoned a transaction because PayPal wasn’t there. Source: https://www.paypalobjects.com/digitalassets/c/website/marketing/global/shared/global/media-resources/documents/IPSOS_Customer_Experience_Study_PayPal_Oct_2018.pdf

Another recent study by Bizrate Insights also found PayPal to be the most trusted payment method on the Internet, after banks.

The Bizrate Insights Payment Security Study #1 was conducted via the Bizrate Insights survey platform and offered to online buyers immediately after purchasing from the Bizrate Insights Network of over 5,000 e-commerce retailers in the US and Canada. Data from the study was collected from 6,256 online buyers

“Among these tech transactional titans, it is those that have low barriers for usage and that have put consumer protection in the forefront, that have earned the greatest amount of trust,” stated Hayley Silver, VP of Bizrate Insights, a division of Connexity. She continued, “PayPal ranking number two, and with greater than 50% trust from the younger generations, could be a ‘Major Opportunity’ that deserves more investigation among its customer base. With low barriers to usage and such high levels of trust, PayPal could make a strong case to add a wallet-less payment option to its arsenal.”

As Silver indicated in her statement, how much people trust online payment methods vary by generation and gender. Much of this can be traced to the fact that younger generations have more-or-less grown up with online payment systems and are more comfortable than older generations. The older the demographic, the more inclined they are to trust traditional financial institutions likes their bank or major credit card. This can be seen in some of the other key findings from the study.

Among the other finding of interest:

• Generation Y is most trusting of their bank, PayPal and Amazon – with less than 50 percent of Generation Y trusting each.
• Generation X has greater than 50 percent trusting their bank and PayPal.
• The only entity earning trust from at least 50 percent of Boomers and Seniors is their bank.

So, how did PayPal address trust issues and become the most trusted e-commerce payment processor?

The evolving role of payment providers

The role of payment providers is evolving. Businesses are no longer only looking for a simple back end payment processor, they need a partner to bring them customers, a sense of trust and security and things like seamless buying experiences across contexts.

Merchants now crave visibility and they need a partner to make them visible online while also bringing customers. Many have developed their own websites and are harnessing social media to promote their products. Twitter, WhatsApp and especially Instagram provide more eyeballs and have a high chance of converting customers. Payment is easier to handle and logistics services are more accessible to fulfil deliveries

In my 3+ years e-commerce experience working with Jiji, a brand that I played major roles building from unknown to Number 1 online marketplace in Nigeria, I got this one single insight: merchant businesses don't need all the cool features, they are not looking for another 3rd party e-commerce solution.

Jiji has no checkout payment processor for buyers, no logistics partners or processes and for a long time, it didn't even look fancy at all. Instead what we built was a very close relationship and partnership with merchants that is bringing them customers. We bring them customers through relentless marketing of their products and making them and their products visible on our marketplace that is easy to use and accessible to buyers in Nigeria.

Like Paystack Commerce, Gumroad was also built for creators. Gumroad has Gumroad Discover, Paystack Commerce doesn't. Gumroad is building a sales partnership with its merchant, Paystack isn't.

Asides the merchant angle which Flutterwave, Paystack and rest have focused solely on, there is still the issue of lack of trust and a real commitment to buyer protection which many Fintechs have chosen to willfully ignore.

Those of us that have been using PayPal from back in the days for transactions on eBay know about PayPal's strong Buyer Protection policy.

As a buyer, you are protected and you will speedily get a full refund (with no questions asked) if:

1. You were charged for something you didn't purchase.

2. Your order never arrives.

3. Your order arrives, but it's significantly different than it was described, including if:

i) the item was damaged en route to its destination, ii) you received a counterfeit version of the item. iii) You received a completely different item, for example, you purchased a book but received a DVD. iv) You purchased a specific quantity of an item but received the wrong amount.

PayPal didn't just mention and publicize the buyer protection program, it enforced it hugely to a point where it seemed like it favoured buyers over its own merchants.

Like the Buyer Protection, Paypal also has Seller Protection to protect sellers from fraudulent buyers.

Scrolling through Flutterwave store, Paystack Commerce and the rest, I noticed there's no single mention of "buyer protection" and "seller protection" anywhere.

Customers and sellers deserve the best, end-to-end. Asides providing a world-class checkout experience, Fintechs that want to dabble in e-commerce should also be ready to provide world-class consumption experience.