Mobile Merchants
By Carol Posthumus, Fri Nov 15 09:30:00 GMT 2002

This mobile move is being hailed as a breakthrough for the transaction enablement of Africa's small entrepreneurs and a delight for tourists who want to get the max service in Africa!

One Norwegian friend could hardly get her arms around her wood carved hippo, after buying it from a roadside curio seller, but, flush with victory, staggered to the car with the very large, curvaceous animal. Proving that you can make light work of even the hugest animal; Inger, moreover, breezed gracefully onto the aircraft. Balancing that hippo like featherweight, she went back to Bergen.

Inger may have never become the proud owner of the alluring hippo if we had not tipped her that you need cash if you want to buy from the many small entrepreneurs who sell magnificent African curios informally. Producing a credit card has long tended to be a frustration, for both buyer and seller, in the midst of otherwise happy transactions. Indeed, a trade of clothing - like Vans sneakers, for an elephant – is often traditionally, desperately, settled on.

Mobile - Makes Style Credit Card Terminals

However, the old ways of trading (as novel as it is to engage in bartering and to see the odd tourist stripping at the roadside) hold many talented entrepreneurs in Africa in the taxing cycle of survivalist business. Some new mobile magic, however, has come to the rescue of entrepreneurs excluded from the credit card mainstream. An exciting new application literally turns any kind of mobile into a small businessperson’s version of an affordable, moveable credit card machine. During August, a merchant in South Africa did the first iVeri Voice-credit-card transaction.

And, already the technology – which iVeri worked on for South Africa’s largest bank, Nedbank - is attracting keen interest from other countries in Africa, like Kenya. Nedbank – who once featured Bill Gates in one of their advertising campaigns here - has before been quick off the mark with mobile apps before. In 1999 those of us in the technology media here went to the unveiling of the group’s WAP banking option.

The Beast Was Huge – The Solution Simple

The iVeri Voice solution, hailed especially by entrepreneurs in the African tourism and entertainment industries, enables credit card transactions to be processed over any tone telephone. The solution, say iVeri, is suitable for most types of merchants – but is not designed for high-volume businesses like supermarkets.

Like Inger and her hippo, this South African-based credit card acceptance technology and software group approached, with no fear and a lot of delight, a beast of seemingly huge proportions that barred small entrepreneurs from the world of credit cards. For instance, entrepreneurs and banks had a need for a “really cheap” (as iVeri puts it) technology - to make the merchants profitable for the bank to acquire and also met the standards laid down by card associations. One, too, that required remote or zero support. Furthermore, training on the product needed to be done remotely. Then, also, merchants needed online transactions as a proviso against fraud protection. GSM and (maybe) landline communications were considered by iVeri - recently judged South Africa’s market leader in e-commerce payment solutions - as the communications networks of entrepreneurs needing a solution.

Playing Out Transactions, Anywhere, Anytime

Since practically all small entrepreneurs have mobiles here, iVeri, which facilitates the processing of Visa and Mastercard – and all other online enabled credit cards – could mean that soon less tourists will be going home barefoot, and “all bartered-out”. The beauty of iVeri is that most entrepreneurs – including those in rural areas who are really isolated from the mainstream of commerce – have the ability to access the system, as transactions can be played out anywhere and everywhere people use mobiles.

Rural women, for example, who do beadwork in villages in districts like the Transkei, often miss out on the best business opportunities (perhaps of a lifetime) when foreign visitors cruise through the pastoral areas, as they do not accept credit cards and are cut off from banks. However, iVeri works with any GSM mobile, and these talented beaders – who almost certainly do not have easy access to landlines or fixed Internet - now can almost immediately be ready for credit card business and become mobile merchants and practitioners of m-commerce.

Making Technology Work for All GSM Phones

CEO of iVeri Barry Coetzee, today an e-commerce specialist, formerly a film and television producer, who worked on many rock and music creations, says iVeri had to make their technology work with the “lowest common denominator”.

“That meant that it had to work regardless of the communication technology present at the merchant. This immediately ruled out any fancy SIM enhancements like WIG. We eventually settled on an IVR system. This allowed all DTMF enabled phones – all GSM phones have this – to access the system. Also, this meant that the merchants could use their own phones to do the transaction.

He continues: “By using their own phones, we effectively removed the hardware costs (including support and maintenance) of doing a card transaction. Suddenly, it became economically feasible for even the smallest merchants to be online transaction enabled.”

Tourism and Entertainment Credit Boost

Coetzee reckons that small entrepreneurs have been left out of the credit card loop in the past due to the factors in their environment. For instance, a lot of POS (point of sale) terminals are imported and built to meet developed world requirements.

“An immediate result is that a large section of our smaller merchants are eliminated as their turnover is below the point at which it is profitable to use these POS devices. So we had a need to provide small merchants with a method to process credit cards online that was profitable and sustainable and at the same time met the standards laid down by the card associations.”

Iveri, in developing iVeri Voice, referred to research amongst merchants in the travel and entertainment sectors. They saw entrepreneurs were stuck in a credit Catch-22. Coetzee puts it like this: “Typically these merchants, running curio stalls or bed & breakfasts, do not have enough transactions to warrant them having a POS device, but their businesses depend on them being able to accept credit cards. Their only other choice was to use the paper voucher system.”

M-Credit Break Away from Costly Paper

While the ‘paper’ system may look cheap technology on the surface – it is not cheap for entrepreneurs. Indeed, reckons Coetzee, paper vouchers can be more costly than POS devices.

“The cost is because the paper needs to be physically moved to the bank, where it has to be physically captured into the system. Not only is this an expensive process, but also the merchant does not get the money until the process is completed. Even worse, fraud is only discovered once the voucher is captured and processed. This exposes paper merchants to a lot of fraud if they have not telephonically received an authorisation at the time the voucher was created.”

IVeri’s m-credit breakthrough for entrepreneurs has been launched in South Africa, but already other African countries are showing interest too, according to Coetzee.

‘Not an Issue in Africa’

“I have received a positive response in Kenya, where two of the banks indicated an early interest. The Kenyan reaction is further interesting as they are also a big tourism destination and the opportunity to increase service levels to tourists is very high there.”

Coetzee is bullish about the future implications of iVeri’s mobile commerce breakthrough. He says the great thing is that in Africa mobile penetration is high (and rising) – “therefore the existence of mobile is just not an issue for us”. Mobile is most definitely something application developers can work with in Africa. Moreover, Coetzee sees the iVeri system being easily used for other mobile banking applications, like micro banking products.

“I feel very strongly that with iVeri Voice we have made a giant leap forward in the transaction enablement of Africa. Using the credit card system, you have access to a universal payment solution, without having to put in any further infrastructure! The implications of this to cash strapped Africa are enormous. And all this could be achieved at a cost that is very close to nothing. I think that the advantages to business are obvious!”

Carol Posthumus is a freelance author, analyzing how mobile technology impacts our lives. She lives in Jeffreys Bay, South Africa.