Remittances from online payments platform PayPal, now account for close to 70 per cent of all Equity Bank Diaspora Banking revenue after the two enhanced the system to process customers’ withdrawal transactions within 3 business days, down from the previous 8 business days.
The Bank did not reveal how much revenue it made from Diaspora Banking but said PayPal users increased by 47 per cent from December 2016 to March 2017. The volume of transactions also increased by 21 per cent in the same period. Equity Bank Group CEO, Dr. James Mwangi said that the Bank is concentrating on global money transfer as an alternative income stream.
The service allows Equity Bank customers with a PayPal account to receive payments in 25 currencies from PayPal’s customer base. It also allows the bank to exploit PayPal’s global reach to tap into its existing customer base of more than 188 million active accounts based in over 200 markets around the world.
Though Equity Bank has been accused by small PayPal to M-Pesa players, the bank sees PayPal as a holy grail, as it’s accepted on multiple platforms and its very secure, in that once you’re registered and verified, you can buy items and make payments locally and internationally without having to enter your credit card details each time or requiring one to share their financial information with the sellers.
The growth of e-commerce has enabled SMEs to be able to take advantage of the digital commerce wave and grow into larger businesses. The partnership between Equity Bank and PayPal is aimed at further giving customers the power to grow and manage their businesses more conveniently and securely.
PayPal’s only problem in most parts of Africa is the need for users to verify their location by a physical address printed either on a utility bill or bank statement which many users lack thereby slowing down its adoption on the continent. Some SMEs also think PayPal is unreasonable to hold funds in new accounts for up to 21 days knowing they are running digital goods and are highly affected by fluctuating Forex rates.