E-commerce in Nigeria: We’re back to the stone age!

In December 2007, I was sharing my frustration about GT Bank Nigeria in a blog post titled: Woes of a Nigerian Internet Banking Customer. Till date, things have virtually remained the same – 3rd party funds transfer using the Internet Banking facility offered by GT Bank is still restricted. Well, things have just got even worse.

Just a few days ago, I discovered ReloadNG.com and attempted to buy some MTN airtime from the website for a friend in Nigeria. I signed-up and attempted to pay using my GTB-issued Interswitch card but got an error: Card restricted. I was terribly confused since I was very sure I had entered the right PIN. After a couple of other attempts, I gave up. It crossed my mind that Interswitch had restricted my card because I was using it online from Ghana (I now know they’re not that sophisticated anyway) but I can confirm this is not the case.

How did I confirm? I used the QuickTeller facility available via Interswitch’s website and I could access my bank account balance as well as the last few transactions. Bottomline, my card is active and my PIN is not wrong.

I got the clue to whats going on through Nairaland this morning:

Due to the high rate of debit card frauds in Nigeria, some banks have started blocking the online feature of ATM cards. So this restricts the use of these cards to ATM machines only.

What now happens to folk that spent 150k to incorporate Interswitch to their websites? I guess most of these Nigerian Banks did not really do their homework properly before introducing these online innovations here in Nigeria.

We are back to the days of endless queues at the banks, even to make paltry payments for services.

To think that just yesterday I was calling on Interswitch to lower their fees?

I always knew that the whole security behind many Internet Banking platforms and debit card systems in Nigeria was very weak. To make payment via the Internet using an Interswitch card, only the card number, PIN and probably the expiry date are authorized in real time. Billing address, card holder’s name and telephone number, are not checked. Thus, just about anyone who has the basic card information can spend it online using any name, address and telephone number. A merchant is therefore unable to verify that the buyer is really the card owner. 🙂 This security lapse makes Interswitch cardholders ripe candidates for phishing emails.

Online fraud is neither new nor exclusive to Nigeria. We need to find working solutions to minimize online fraud. The Interswitch system needs to be thoroughly revamped. The system must necessarily come with advanced security features. Turning-off the system entirely will only move us back to the stone ages of queueing in the banking halls and ultimately make doing business online from Nigeria very difficult.

Are you a resident of Nigeria and a user of any of the discussed services? What are your thoughts?

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Oluniyi D. Ajao
Oluniyi D. Ajao is an Internet Entrepreneur and Tech Enthusiast based in South Africa. Follow him on twitter @niyyie for more tech updates.


  1. To be sincere, Interswitch is just like your typical Nigerian company (No foresight). How could they not have seen this coming?

    While the likes of Paypal continue to increase the security features of their system to reduce fraud, Interswitch has remained the same since its inception. I guess Interswitch took the issues of Fraud lightly despite the nasty reputation Nigeria has in cyberspace.

    For now, the temporary remedy will be for Interswitch to promote its Cashcard brand. Cashcard is just a card account that is not attached to any Bank Account; you simply reload at any participating bank, and spend. I got mine from Skye Bank and it works perfectly online.

  2. […] David Ajao laments the state of e-commerce/Internet banking in Nigeria. His experience with Interswitch, one of the major platforms for online transaction led him to declare e-commerce in Nigeria is “back to the stone age”. Read full text […]

  3. This is not good! I have been reading up on the Interswitch API and about ready to implement the system in one of my projects. So other options are there for online transactions then?

    The best solution to Nigeria business woes is competition. When a better system comes on board, the slackers either sit up or die. Unfortunately, it appears the competitive spirit is either not there or simply frustrated.

  4. It is very easy to criticise and bring rubish efforts, but i will like to say that there is no perfect system. If you read how mastercard, paypal and other payment solutions started and the problem they are facing even up till now, you will agree with me that we only need to encourage interswitch and others to tighten any loophole that our people may take advantage of. Kudos to interswitch, i have enjoyed this facilities provided by interswitch both locally and abroad without a hitch, at least for almost two years now. I have shop online on local sites and foreign sites with it without stress. Reducing the cost of integration will help Nigerian business to get online in a quick time.

    • Mike,

      Maybe we should reinvent the wheel instead of learning from the mistakes others make and leap frog them we are content with starting afresh. Thats why our whole system as a country is the way it is.
      Interswitch can add an additional line of security such as the token system that makes it impossible for someone without it to actually make payment on a card account online. But my guess is that they have made so much money that they can’t be bothered about what anyone says.

      Come to think of it, if not greed why charge almost $1,000 for an API?

  5. l bought some plots of share with Treasureline at lbadan last yr March bt till 2day they haven’t pay me mysh capital

  6. I read your issue on Nigeria atm cards and GTB. What you said about GTB is correct. I applied for GTB master card and loaded money in it but was declined on every website i tried using it to purchase. The issue now is that i can’t withdraw the money through any ATM machine. I also went to GTB branch to see how they can credit my balance back to my dom account and they told me it is impossible to have my $100 credit back. I can’t withdraw and i can’t have my money back.
    I also experieced the same thing with Zenith Bank. I got thier web surfer master card and it was declined on every website i tried using it to purchase and when i went back to them, they told me that my $120 that was in it is not refundable.
    It is realy frustrating.

    • Though its been long this happened or that u posted this link but i believe that you got the wrong information about you not getting a refund with your zenith websurfer card. I’ve also had that experience and my money was refunded back to me. Also it depends on the website you visited. I make purchases on line with my zenith websurfer card, mastercard and visa card. Just make sure that Nigeria is amongstthe countries that is listed on the website before you start making your orders. I’ve reserved hotel rooms, paid for some products and services online with my card and believe me it works without a hitch. Better still you can call their customer service. The number is provided at the back of your card and they will follow up on it.

  7. Hi

    This is a very unfortunate situation. With such poor efforts from the financial sector ecommerce will never take off, limiting online entrepreneurship. In South Africa (my home country) the situation is much better, but even here there are barriers to ecommerce (like no proper access to Paypal)

  8. Hi, I can only but echo your sentiments on InterSwitch’s issues. I think it needs to get worse before it gets better though. We have a few trust issues to get through first. When the stigma associated with the few bad egg’s proficiency at 419 starts to abate, we might see Nigeria truly coming on-line in the 21st century.

    Not all the systems are in place yet to allow cross-referencing and address checks nationwide as there isn’t a fully functioning credit-rating system yet. Once this happens and is in place look for these restrictions to begin to ease. For now the best way for people to get stuff on-line consist mainly of getting their friends and relatives in diaspora purchase the goods or services online on their behalf.

    I think we’ll get there in the end; it’s just so frustrating to have to get through these issues as an entrepreneur.

  9. Its high time that m-commerce is developed to overtake payment solutions for e-commerce purposes especially in places like Nigeria.

    Simply put, m-commerce is the ability to make payments for proudcts using your mobile phone. Currently in active deployment in about 25 Western countries at the moment, it will be integrated as a means of attracting people who do not feel comfortable with paying with thier cards online and offers several options for persons who use either pay-as-you-go packages or even contract lines.

    In other words, if you needed to pay for a book online, all you had to do was to load the value of the cost of the book on your mobile phone (if you use pay-as-you-go) which you will get in your local currency (at the going exchange rate) and send a text to a desgnated number. You will recieve a text with a code and enter that code on the website where you are making a purchase. That effectively completes your transaction and eliminates or reduces the ability to carry out fraud.

    It is a novel idea which will no doubt change how e-commerce is done in Nigeria. You can take your time to fill out this survey with regards to e-commerce in Nigeria http://www.surveymonkey.com/s.aspx?sm=CwDKTRblmf4F8A5e8VxseA_3d_3d


    • I think your idea is very brilliant because it solves all the complex problems associated with using an e-commerce platform in Nigeria.

      The major problem is ascertaining that the purchase is made solely by the owner of the card. But with a mobile payment solution, all that is solved as 99% of the time transactions would be generated and concluded solely by the card owner.

      Is there any solution provider that you can think of?

  10. Interswitch is the worst ecommerce organization in the whole world. They are directly responsible for the poor growth of ecommerce in Nigeria. They love so much money and are not ready to offer wonderful services

  11. It’s quite pitiful to see Nigerian companies being so short-sighted. Anyway I beleive the solution to Nigerian problems had always been there staring us in the face, what puzzles me has always been the realisation that Nigerians don’t just like thinking or what? I do not like to accept this possibility, but the reality of the situation just poits to this fact.

    Straight to my point, I am part of a team that have designed an online marketplace that is customised for the Nigerian and African market, and comfortably rival the likes of ebay, amazon etc. as well as an e-payment solution that takes into consideration all the inherent flaws in the current e-commerce entities, that can comfortably rival the likes of paypal, moneybookers et al. We presently trying to get our patents other legal issues sortedm and also get investors.

    To be candid, the failure of most e-commerce ventures in Nigeria, that is characteristic of most business ventures and enterprenuers, is the lack of detailed feasibility study and understanding of the market. In fact, players in the e-commerce industry believe they can just replicate innovations that had proven successful in US and other developed countries here in Nigeria. This is what the Nigerian government had done over the years with “imported policies” and the result still speaks for itself till date. In as much as innovations, business solutions, policies, etc, are not tailored to meet the unique characteristics and realities of the target market, failure will continue to be the only result.

    I believe, most e-commerce ventures will not only be operationally succesful, but also profitable if they are expertly “NIGERIANISED”. People just need to keep thinking and be more analytic. we don’t need to be geniuses to do this. Nigerians needs to start thinking of solutions from within.

    We are set to step up preparation into the launching of the online marketplace and the epayment solution in the last quarter of 2010. We hope to put an end to Nigerian’s frustrationtion by providing quality e-commerce solutions and services that are tailored to meet the needs of the Nigerian teeming Nigerian population.

  12. […] E-commerce in Nigeria: We’re back to the stone age – http://www.davidajao.com/blog/2008/02/20/e-commerce-in-nigeria-were-back-to-the-stone-age/ African Tech Blog […]

  13. […] References: Small Medium Developing E-Commerce Pulled GDP Growth of China – http://www.pressabout.com/small-medium-developing-e-commerce-38716/ How e-Commerce is transforming Britain’s Economy – http://www.rndaily.com/how-e-commerce-is-transforming-britain%E2%80%99s-economy/221319/ Goldman Sachs Tech and Internet Conference 2009 – http://www.scribd.com/doc/12984829/Goldman-Sachs-Tech-and-Internet-Conference-2009-Issues-and-Outlook Nigeria – Convergence, Broadband and Internet Market -http://www.budde.com.au/Research/Nigeria-Convergence-Broadband-and-Internet-Market.html?r=51 E-commerce in Nigeria: We’re back to the stone age – http://www.davidajao.com/blog/2008/02/20/e-commerce-in-nigeria-were-back-to-the-stone-age/ […]

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