Everything was normal for Eran Feinstein, an ex-Israeli army helicopter pilot. He had a happy wife and family and a huge cycle of friends. He had quit his plum army job, studied computer science and business administration and was working in Israel’s e-commerce industry until one day, he got a phone call from an airline in Kenya.
Eran was needed to help the airline sort out its online payments. It was the early days of Internet in East Africa and there were literally no players. He boarded a plane, did his consultancy job and saw a young nation rising and he went back home. But life would never be the same again.
Eran would not stay at home anymore. In 2006, his mind was fixed. He had finally found something he passionately wanted to do. The harder he tried to brush off the idea, the clear it became in his mind. The business idea was like his shadow, accompanying him wherever he went. He gathered up all his courage, convinced his wife and kids, packed up a few items and booked themselves a one-way ticket to Nairobi.
Over 600 clients in 8 years
Now nearly eight years since his decision to move to Kenya, Eran says he has never regretted. 3G Direct Pay, the firm he founded now has over 600 clients across Africa and is set to expand into Botswana, Namibia and Ethiopia soon.
“We began as as an online travel booking systems for airlines, but after sometime, we realized there were no online payment systems in East Africa so we decided to introduce them. After operating as a booking platform for three year, 3G Direct Pay focus entirely on online payments as its main business.”
“I am happy because we went through all the phases. People told us we were either mad or stupid because no one would ever pay online in Kenya or in East Africa, but I had learnt something when I was young. When were told that no one was willing to pay online in Kenya, we saw it as a challenge and opportunity.
At the moment, the firm has over 600 companies from Kenya, Tanzania, Zanzibar, West Africa using its online payments system which accepts all major credit cards, mobile money and e-wallets and promises double the security, efficiency and modern technology.
“Four years ago we had just two hundred clients but because we have been good at it for long and are experts in online payments, more clients began coming,” Eran says.
“We set some standards the time we began to do online payments all the way and we have been working with banks in Europe and in the US and firms like PayPal among others in the payments industry.
Mobile partnership for offline payments
The firm is also working on a new partnership that will see it offer both offline and online payment services to its clients. This partnership see 3G Direct Pay clients accept non-cash payments offline too just as it has powered online payments for its travel agencies.
“We have selected an offline payments partner because they are good at it and we want to stick with our online expertise Eran says. “It’s not that cannot it all but we think everyone should be doing what he is doing best.”
Because 3G Direct Pay wants to power both offline online payments across Africa efficient, it’s set to launch in Namibia, Malawi, and Botswana and Ethiopia especially due to its growing population.
According to the CIA World Fact Book, Ethiopia has over 90 million people and nearly 1.5 percent online and more getting online. Eran expects the huge population to be his customers both online and offline. The expansion into these countries will also help it be maintain its position as a leading online payments processor, providing payment solution services to hundreds of travel related businesses in East and Southern Africa.
It’s customer base is strong already strong in Kenya where it also faces stiff competition from firms like PesaPal, iPay, Jambopay among others. It’s also gaining a user base in Zambia, Tanzania, Uganda and is massive in Zanzibar, where it serves 35% of the country’s hotels, over 25 airlines and a number of tour operators and travel agents.
3G Direct Pay’s upper hand is its 8 year experience powering online system and the founders e-commerce experience back home in Israel. I think his army background is also another advantage on online fraud prevention, which is estimated to cost firms.
The firm is not launching in Rwanda soon because it says there is not much massive online transactions market yet but it’s keeping an eye on it.
Avoid being a jack of all trades
It’s not that we cannot do many things, but years ago I decided that when we do something we should be the best, that’s why we are the express firm for the online travel industry and we know exactly what we are dealing in and know what clients need, we cannot provide everything, its like but, people ought to act like professionals. This is where there are losing focus.
Everyone should be doing what they know best. Our next industry is the restaurants industry and we are not losing our focus which online payments for them.
One agency turned to him after their former payments firm messed up a customer transaction. The said online payments firm asked the agency to ask the traveler to provide a copy of his passport and credit card.
“Asking a client to send you a copy of the card is illegal. You cannot ask for a client’s copy of credit card and passport,” he says, triggering laughter from a woman sitting next to our table.
“They scared the client away, entrepreneurs need to focus on what they are good at and provide that at their best, instead of providing everything to everyone. Act like a professional and you won’t lose your customers,” says Eran.
And then he assures me 3G Direct Pay is serious on ending fraud.
Big data to combat fraud
According to a report from CyberSource, a unit of Visa Inc., retailers’ revenue lost to online fraud increased over the past two years to reach an estimated $3.5 billion, up 3% from $3.4 billion in 2011 and 30% from $2.7 billion in 2010, CyberSource Corp., a provider of payment processing and risk management services, says in its 2013 Online Fraud Report.
But the news isn’t all bad. The estimated loss of $3.5 billion last year is down from the recent highs of $4.0 billion in 2008 and $3.7 billion in 2007,
The average fraudulent online order ticket value dropped 20% to $200 last year from $250 in 2011. By comparison, the average valid orders ticket value dipped to $149 in 2012 from $150 in 2011.
With an eight year old database, 3G Direct Pay says its online fraud prevention centre is the most advanced and the biggest in East Africa. He says the firm has a team that analyzes data from its database and from its partners worldwide. The team tracks fraud patterns and can identify a fraudsters from whichever location worldwide. The team also monitors transactions in real-time, flags fraudsters or cleans doubts on those that have been blacklisted, or whose cards have been marked suspicious.
Eran stresses that fraud is different from the kind of service a firm offers, a firm selling airtime online and another allowing others to pay for services online have different modes of combating fraud. Fraud parameters in the online travel industry is different from online airtime sales. Airtime fraud is small and requires less technology compared to online travel.
3G Direct Pay monitors transactions by looking at the good side of the person not out to blacklist everyone. It uses parameters to convert one to be a client than blocking them. However, this does not mean the firm is lenient on fraudsters.
“The moment we confirm from data that one is a fraudster, we will nab them. Though we want to work with as many good people as possible; our clients shouldn’t worry about fraudsters. We know how to deal with the fraudsters and we want our clients to do business more freely.”
Payment service providers need to know the industry they work in and be able to litigate risks when they come up so as their clients are safer without having to carry guns to their premises. People are no longer carrying cash on them. As firms go cashless, so does fraud but with firms like Eran’s using technology to secure clients, the future is bright, even with hopes of an influx of more players by the day.
More players in the industry will be good. Three years ago, 3G Direct Pay was the only player in the online payments industry, things have since changed.
“It’s ok, the marketing is developing quickly. It’s growing rapidly and it will be ok if we have more players, big and small and among those if we have one that is offering good services will take over.
We were the only players but at the moment other companies providing online payments are coming in, more players will make the services even better, its not about reinventing the wheel and building own M-Pesas but making the existing solutions better. The serious ones will take over. We might have 3 biggest payment processors in the region in five years, the market is still moving.
In the future Eran thinks Safaricom’s M-Pesa will be the region’s biggest payments processor, even better than their mobile services as they better at financial services. There and At the end of the end, when this guys agree on connecting themselves together, this is the future. We are not the back, we are not M-Pesa, so we would want to that’s why we need partnerships.
The future of payments in Africa
Eran is looking into a future where a group of payment players will come together and give users an interconnected service.
“At the end of the day when the giants-the banks, the mobile money providers will be connected, that is the future of payments,” says Eran. “The future of payments is when one machine can connect all the payment options available.”
He hopes that banks will just act as the back-end system and users won’t have to go to a bank as a company can connect them to the bank. He says that though M-Pesa is brilliant, the main problem is that it’s not connected.
“I am looking at a future where these options are connected, that when you want to pay with M-Pesa, money leaves your Airtel Money or bank account to your M-Pesa account. It’s a matter of time when M-Pesa, Airtel Money and our banks are fully connected,” he says.
Eran’s suggestion is not just a dream; various studies have suggested the need for mobile money interoperability to allow users switch money across accounts and even save money.
Away from home, a new payments player dubbed the Coin Card recently launched in the US. Coin replaces all a user’s payments cards and gives them an option to pick whichever card they want to pay with. Eran says this is in the horizon; his firm is working on a partnership which will see their online system.