E-payment start-up SimplePay wants to beat cash in Nigeria

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Subject: E-payment start-up SimplePay
wants to beat cash in Nigeria
From: Fraunt Raiz Inc <frauntezic@gmail.com>
To: My Mtn Official <frauntezic.news@blogger.com>
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The Nigerian government is pushing a policy which stipulates that
daily bank cash withdrawals exceeding N500,000 (about $3,000)
for individuals and N3,000,000 ($18,000) for corporate bodies
should be charged a 'cash handling' fee. The new cash policy
seeks to reduce the amount of notes circulating in the market and
encourage adoption of electronic transactions.
Last year biochemistry graduate Simeon Ononobi started
SimplePay, a web and mobile-based wallet that enables users to
pay for services such as mobile recharges, federal taxes, church
contributions and school fees.
Dinfin Mulupi spoke to the Nigerian entrepreneur and SimplePay
director of operations Richard Tanksley about their experiences
running an e-payment platform in a country where people love the
"flash of cash".
What inspired you to start SimplePay?
Ononobi: I had issues with starting up my own e-commerce store
as payment was a problem. I then realised it was the same for
many others so decided to pursue this as a business venture. The
market opportunity is huge in Nigeria because we have a bigger
population than the number of customers PayPal has in over 100
countries.
Tanksley: There are 174m people in Nigeria and an estimated 25m
smartphones. This sector is experiencing explosive growth due to
the rapidly falling price for decent phones. Nigerians with
smartphones are our target market. A portion of that target is
people who hate waiting in line at the bank (which is all of them).
Cash is dirty, dangerous, bulky, and there is never an ATM when
you need it. We solve these problems.
Describe the market reaction since you launched.
Ononobi: It has been great. Online payments have always been a
big issue in this market. So a solution that is secure, convenient
and well-priced is quite attractive to users. In just about a year we
have 10,000 registered users and over 30,000 unregistered users.
Our customers are people who need to collect payments. A lot of
them are also merchants who want to make sure that they get paid
using a secure service that has fewer 'charge backs'.
Explain some of the challenges of running the business.
Tanksley: We are trying to change attitudes. That's not easy
because people love cash in Nigeria. We have to convince them the
convenience of SimplePay is worth more than the flash of cash.
Ononobi: We face loads of challenges, ranging from usage and
acceptability of the product by users, to having to pay for
everything. Power has also been a great hindrance to growth as we
use a generator which is costly. Additionally, hiring the best hands
and being able to pay for that talent has also been difficult. But
generally, we have learnt to cope with the demands of doing
business in Nigeria.
Swiss venture Seedstars has invested about $300,000 in the
company for a minority stake. Tell us about the investment
process.
Ononobi: We took part in a competition for start-ups which we won
at the local level. We then went to Geneva for the global round of
the competitions to represent Nigeria, emerged second and got the
funding. The negotiation process was long but not difficult because
the relationship was based on mutual respect and trust. They were
attracted to SimplePay because it is a viable business set in a
fast-growing economy.
Any mistakes made along the way?
Tanksley: We should have cut costs sooner. All start-ups start
spending more money than they make. The goal is to get to cash
flow positive. You can do that by cutting costs and raising revenue.
We should have cut costs sooner so that our runway (time before
the funding runs out) is longer.
Ononobi: I have made lots of mistakes but I have also learnt a lot.
One, in the early days, was to try to do everything. The result was I
actually reduced my output at work. One particular situation that
comes to mind was trying to do accounting when I don't even know
the basics of accounting! To solve this I tried to get the best
accounting option for the cheapest cost to the company. I have
since learnt to focus on my strengths and get help where I need it.
It has been a great learning curve for me.