PayPal Alternatives for African Entrepreneurs


This is a follow-up to yesterday’s rant about PayPal’s lack of availability in sub-Saharan Africa.

Although PayPal is ubiquitous in the States and Europe, there are many alternatives available online, most with far more relaxed policies about where and how money can be sent. The alternatives are more expensive and less flexible, but it’s utterly untrue that there are no options for African entrepreneurs.

Here are some practical solutions to PayPal’s limited African availability.

Moneybookers is roughly equivalent to PayPal in features and it allows users to transfer their balance to any bank account in the world, or will mail a check in one of several currencies to an address of your choice. Incoming transfers are accompanied by insanely high fees in throughout Africa, but not as high as the fees to cash an international check. They solve the fraud problem by withholding ~7% of each transaction to cover refunds, but you can apply to opt out of this service after a certain period.

2Checkout is a credit card processor that allows anyone to set up a merchant account with them. Compared with other services, start-up feeds are low ($50), although they take a percentage of each transaction. Their preferred method of payment is a special MasterCard debit card that they mail to you and holds the balance of each transaction. You have to live in a country with ATMs that accept MasterCard (or Maestro), but it’s a viable alternative if you want to accept credit cards online.

iKobo is a money transfer service that, like 2Checkout, pays out via a debit card (VISA). Their business services are somewhat limited, although they appear to offer merchant accounts all over the world. Inter-African fees for transfers are about 6%, which makes it cheaper than Western Union, but more expensive than PayPal would be if it actually worked here.

NetTeller is a UK service that bills itself as a PayPal alternative. It appears to offer payments to just about every country in the world.

I’ve been told that e-Gold is quite popular in Nigeria, although I’ve never met anyone who’s actually used it.

I know there are some homegrown solutions in South Africa, but I’m unsure of their availability for the rest of the sub-Saharan Africa. How do you get around PayPal’s restrictions on where and how money can be sent? What are your experiences with the above solutions? Are there others that you recommend?

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About the author: Theresa Carpenter Sondjo is an entrepreneur and web developer. She lives in Cotonou, where she and her partner run People Online. Their mission is simple: la mise en ligne du Bénin. Follow her on Twitter at @theresac.
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