OoTheNigerian

sometimes, I make a lot of sense.

Category Archives for: Technology

Here’s Why Uber Debits Nigerian Accounts Up To Twice the Quoted Fare.

02 March 2016 by Oo Nwoye

Yesterday,  my account was debited twice the quoted Uber fare amount of  ₦ 1150. I was excitedly spoiling for a fight then sadly Uber refunded my account the complete trip fare.

This over debiting is not a new phenomenon.

From my interaction with the very polite C Jennie, the internal reason being given (and perhaps understood) for this discrepancy is “International Bank Charges” so I decided to reply and give what I know to be the main issue.

Here’s an excerpt from the Uber support email (I will not include my previous exchanges but I’ll say this “Oo, you could do with reducing the benin boy in you”)

Hi Oo,

Sorry for the confusion here. Happy to explain.

Given Uber’s international structure – our merchant account, Uber BV, is based in the Netherlands, and therefore certain banks will add an international transaction fee when their cardholder makes a purchase from Uber BV. Uber has no control over whether your bank chooses to add such a fee. While this isn’t an optimal experience, you may be able to lower or avoid these fees by using a different credit card.

I have gone ahead applied NGN 2300 credit to your Uber account which will automatically apply to your next ride.

Please know that we have no control over these additional charges and only charge what you see in your Uber receipt.

If you check your trip receipt, you’ll notice we have a disclaimer at the bottom that reads: “Fare does not include fees that may be charged by your bank. Please contact your bank directly for inquiries.” Our intent is to be as transparent as possible and make it easy for you to pay for your Uber requests.

Hope this clarifies things. Let me know if there’s anything else.

Being one never to let a chance for me to explain something pass, here is my response which explains the issue and why the overcharging it is Uber’s fault  responsibility.

Thanks for your response and the refund.

I work in tech and understand what’s happening, so I may be in a better position to explain to you and will cos you were kind enough to sort this out :)
It’s not bank fees but an exchange rate issue. 
In Nigeria today, there are 2 exchange rates for the Dollar. The official one is $1 = ₦ 200 the black market is $1 = ₦400
When a Nigerian buys a domain name for $10, his bank deducts ₦4000 because the banks operate with the black market rate (getting dollars at the official rate is hard). The customer does not complain though. Why? because it was $10 that was charged and knows there are 2 prices for $10. ₦2000 if you buy it officially and ₦4000 from the black market
Here is where and WHY Uber is at fault.
When Uber wants to charge you ₦2000, Uber displays ₦2000. That is all the customer sees and knows.  However at Uber’s backend, Uber asks that $10 be charged (because Uber ASSUMES it is the dollar equivalent). So both Uber BV and the Bank see $10. And what does the Nigerian bank do, they charge at the black market rate thereby removing ₦4000 from the customer’s account.
How can Uber (and other Nigeria based merchants using foreign processors) solve this? 
The only way to solve this is to send the processor the charge Nigerian denominated bank cards in  Naira and not in Dollars. For this, Uber will need to open a Merchant account denominated in Naira. I think it is only in Nigeria you can get such. 
Payment processors you could yous are Paystack, Interswitch, Paga (you guys have an arrangement).
This issue affects anyone using a foreign processor  in Nigeria.  Harsh but true is the fact that it is not the customer’s business  what processor you are using. You cannot say something costs x amount and 2x will get deducted. It’s that simple.
As for Uber, the only way to escape this extra deduction is to use cash. Before you place your Uber order, click the Card symbol and change it to cash.  If you are yet to download your Uber, you can do so here and get $15 credit. I’m sure if it’s a naira fare, it would be exchanged at ₦200.
Criminal Banks!
PS: This of course this opens another topic about global payments in a globally connected commercial world.  I’m still a long way from understanding how the block chain (awon Stellar, Bitcoin etc) would impact this.

 

1 comment | Categories: Nigeria, Technology | Tags: , , ,

The Wedding Opportunity. A Match Made in Tech

21 February 2016 by Oo Nwoye

WeddingPackagesng.com
Finally!  Someone gets the wedding business opportunity when prospective couples can answer the question
“How Much Will The Wedding Cost?”
From crowdfunding from friends & family, to making weekly/monthly payments towards a wedding happening in X weeks time, to other things; the opportunities are endless once both planner and couple have that answer on lockdown.
 
If you throw in tech the right way, and proper execution, we have a company that can actually do hundreds of wedding events weekly in half a decade. Of course, economies of scale will only make weddings more affordable.
 
If that is not a Unicorn in waiting, tell me what is.
 
The clarity of the opportunity excites me especially as I have over the years, tried to get various people tackle this opportunity.
 
(Since I know the co founder of this, I will not be detailing how I see this being executed. But execution is all that matters though)
 
The end game for me has always been coordinating product development at a technology incubator I co run. And seeing this reminds me more and more MASSIVE opportunities are out there.

Anyway, if you are planning to get married soon, check out Wedding Packages. Focus on your marriage let someone else sweat the details of a one time event.

PS: If you already run an offline business and you’re looking at how tech can be applied to scale it,  hit me up if you need suggestions.  I can give you 30 mins of my time. It’s on the house.

PPS: Mummy & Nneka, don’t get carried away. I was not researching wedding details online. I just happened upon this. Be patient 😛

1 comment | Categories: Startups, Technology | Tags: , , ,

Nigerian Payments, Solved.

08 February 2016 by Oo Nwoye

Paystack is the easiest way to accept one-off and recurring payments online. We’ve figured it all out for you, from start to finish. No set up costs, no token, no redirects, no commitments.

Source: Paystack Blog

Oh my, I have waited to write this post for years! The title was ready 3 years ago.

For quite a long time, I and many others kept on lamenting about the dire state of Nigerian payments especially as it involved digital payments. It led me to write a blogpost where I lamented life as a second class citizen of the web saying

Don’t fucking worry about bridging the digital divide, just level the playing ground!

Of course I perpetually predicted payments solved every other year. and ranted when I had the opportunity .

Of course I am not including the times I shamelessly pleaded fro Stripe to “come to Nigeria” (Hey, don’t come now, we’re good) and my compatriots launched a petition to bring Paypal to Nigeria.

So what were the main issues?

it is practically IMPOSSIBLE to build an Internet company without the ability to collect money easily and store the cards securely to charge again.

Almost none of the YC companies would be viable without it. Same as Apple, Microsoft, Amazon etc.

Anyway, it’s all sorted now. A little boy in Jigawa can quietly build his SaaS company and get paid for it. A little girl in Ebonyi can easily sell goods digitally and sell to the world.

Take it from me, Paystack is a big deal and it is 100% Nigerian made for the make benefit of Nigerians and Africa. The recognition of its importance will be apparent soon

Shola, you did it man. Congratulations to you and your team. The real work begins now.

Leave a comment | Categories: Startups, Technology | Tags: ,

Remita, TSA and Four Questions Arising

17 November 2015 by Oo Nwoye

With the full implementation of the TSA policy by the Buhari Administration, SystemSpecs a Nigerian technology company has been accused of swindling the country of billions of Naira using Remita, a product of the company.

The aim of this blog post is to explain Remita’s role in the implementation of the TSA and try to highlight where the issues have come from and ask some pertinent questions.

First, some background information.

TSA, which stands for Treasury Single Account is a policy that intends to consolidate all government revenues in a single account. The idea is, whether you are paying N100 for injection in UBTH (University of Benin Teaching Hospital) or buying crude oil with hundreds of millions of dollars from NNPC, or paying NTA for adverts, all the monies would be domiciled directly into a single account at CBN (Central Bank of Nigeria)

Why is this necessary? This is to avoid situations whereby, administrators of various agencies (UBTH, NNPC and NTA in our examples) from having direct control over the money collected by their agencies. If they need money, they will have to apply to get it from the CBN account. No more dipping hand into the government purse to do “thanks for coming”

Remita, The Chosen One.

Before the TSA implementation, each of the government agencies decided where to open accounts to keep these government revenues and HOW to collect the monies. So the CMD (Chief Medical Director) of UBTH could decide to open 10 bank accounts for UBTH in 5 different banks after a lot of lobbying had been done by branch managers etc, NNPC could have another 20, NTA another 15. This is also where allegations of “fixing money” for interest used to come from.

The implementation of the TSA policy (enshrined in the constitution) was piloted by the Jonathan government. Only a few MDAs (Ministries, Departments and Agencies) like the FIRS were chosen to pilot this system.

For the pilot, SystemsSpecs built a product called Remita that could be used to collect and collate money through multiple channels and was chosen to be the software to be used for this collection.

That is the first issue

Sunk Costs and Competition.

There are 2 ways people usually pay for things in Nigeria either with cash deposits at the bank or cashier points, or using a credit/debit card at a POS or online.

BEFORE the TSA implementation, each MDA set up individual systems for collections. Companies like Interswitch, ETranzact, SocketWorks, etc (which primarily do online/digital collection) already spent LOADS of money trying to get the contract to give them the right to collect money on behalf of these agencies. In some cases, they had to build infrastructure in these MDAs (computers, Internet, Generator etc) to make their work easier.

SocketWorks for instance collects money on behalf of Immigration, Interswitch on behalf of many Hospitals and Schools etc, Same with ETranzact. And we are not including “other costs” of doing business in Nigeria. SystemSpecs also had a few customers.

The Buhari then put a deadline for the TSA implementation.

The CBN rationally decided to use the provider and product that had run the pilot system and that was SystemsSpecs’ Remita.

All of a sudden from sharing the spoils of various MDAs, all the other providers lost all those customers and commissions to “one Remita of a somebody”

All their hustle, down the drain.

That is the second issue.

Commissions and Payments

When a person or an entity collects money for you, it is the norm for the person to be paid part of the proceeds to collect and reconcile that money. For online payments, there are many players who share the ~2% fee that is charged the merchant. For cash payments, it is less standardized but it can be up to say 5% of each transaction.

So of the 1000 naira you pay to UBTH via Interswitch’s WebPay or PayDirect, they take ₦20. By the same calculation, if you pay ₦1 Million, they are entitled to ₦20 000. However, there is usually a cap on the amount of commission on each transaction.

Thought Remita transaction charges are capped even on their website, it seems the deal with the federal government is 1% uncapped.

That is the third issue

Double Charging

BEFORE the full implementation of TSA, monies had already been collected. So let us assume UBTH had ₦1 Billion in a Unity Bank account somewhere, they were given a deadline to transfer that money to the TSA domiciled with CBN.

Note that money in Unity Bank was ALREADY less the commissions paid to collectors like Interswitch.

In transferring that money to CBN, it is alleged that the Banks rather than using NIBSS (Nigerian Interbank Settlement System, a company owned by CBN and the Banks) and paying next to nothing, decided to do it through Remita who would take an uncapped 1% (25 million in this example) for doing absolutely nothing.

That is the fourth issue

In summary, here are the questions arising that are causing problems.

  1. How was SystemsSpecs/Remita chosen to be the sole collector for the Federal Government? Was the Procurement Act followed?
  2. What happened to the existing systems that were put in place especially the ones that had long term arrangements and high setup cost?
  3. How monies are ALREADY in the system (bank accounts) be transferred to the CBN account?
  4. As for the collection, what is the commission taken my SystemsSpecs? Is it (un)capped?

Those are the main issues from what I understand from all parties. Of course aw with politics, there people are mixing up issues to sell their agenda.

That Remita stands for Remi Tinubu Ahmed as much as Jega stands for Jonathan Ebele Goodluck Azikiwe.

My Comments.

  1. For once, it is a good thing that an indigenous company is being used for such a project.
  2. It is understandable if the Federal Government decides to use a single provider/system for the collection of taxes and revenue. However, it could be a big risk to have one single entity doing everything from Customs to Schools to FIRS.
  3. There should be a transparent procurement process for the service provision and more than one provider chosen.

Fun facts

People are usually crying that Interswitch is the bully. It is interesting to see Interswitch crying foul.

Remita actually uses Interswitch’s WebPay for the online collections part of the as a middleman for the online payments aspect. As at yesterday when I checked, it was no longer working.

Coincidence?

 

Thanks Boro for reducing the typos. 

4 comments | Categories: Nigeria, Technology | Tags: , , , , , ,

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