E-commerce needs a payment API

   

Lately, there has been a lot of noise over how classified sites could lead to a boom in e-commerce,yet online peer-to-peer marketplaces (classifieds) do not quite qualify as electronic commerce. The payment method is agreed upon between buyer and seller, and might as well be good old fashioned cash: the ‘place of commerce’ for those transaction, as it were, is mostly offline.

The problem is that peer-to-peer payments restrict commerce to peer-to-peer sales. The missing ingredients for full-scale e-commerce are centralized merchant storefronts. Local classifieds sites are comparable to EBay and craigslist in form and function, we do not yet have anything comparable to Amazon or NewEgg. There have been a number of merchant e-commerce sites targeted at Zimbabwe’s diaspora with varying levels of success, but none has succeeded in reaching Zimbabweans in Zimbabwe.

I suspect a major factor is the lack of internet-based payment options, which is ironic considering how wildly successful mobile wallets have been (EcoCash is the runaway leader, with Telecash in second position). An unencumbered, trusted, internet-facing payment API (Application Programming Interface) seems like a natural progression from mobile wallets, but neither Econet, Net*One nor Telecel have chosen to provide one.

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Without a payment API, payment processing cannot be automated, and without automation there is no possibility of scaling sales. Without scale, e-commerce merchants are not viable because scale is biggest advantage over brick-and-mortar stores. If you need a human to manually process or verify every payment (as you would have to do currently with EcoCash or Telecel), you would be limited to roughly 10 transactions per hour (Amazon sells 426 items per second during peak periods).

I imagine a developer could ‘McGyver’ a flaky system to parse payment SMSes with a GSM Modem and Gnokii or Gammu, but there’s no getting away from the fact that SMS is an inherently poor choice for EDI. Integration with existing shopcart software like Magento or Shopify is a challenge without an API.

Looking to the future, things do not look very rosy. Telecel had promised to publish an API, but it only got as far as inviting interested parties to sign up for limited trials. It’s a reasonable first step, but only if there are other steps following, and so far there are none. Paynow has an API and a distinct first-mover advantage, but it has its pros and cons. Pros: allows payments from EcoCash/Telecash as well as ZimSwitch & Visa/Mastercard. Cons: mandatory payment escrow; slow payment into merchant account (in the order of hours or days); additional ‘middleman’ fees on top of any fees payable for underlying services fee (Visa/Mastercard/EcoCash/Telecash).

I am not holding my breath for a first-party EcoCash API, given Econet’s historical aversion to interoperability. Perhaps the best thing that could happen for merchants would be a partnership with PayPal supporting payments into and out of mobile wallets.

Image courtesy of Marc Falardeau. CC BY 2.0


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