Why is it still so hard for businesses in developing countries to process payments online?

Here in Yendo we pride ourselves in the service we offer to small businesses in the developing world. Yendo has a very wide customer base including a large number of customers in both Africa and Central-South America.

These customers are very important to us and it is always very frustrating when they are prevented from using our service because of payment issues. In the last month alone we have turned away customers from countries such as Haiti and Cameroon. Businesses from these countries, and several others, cannot yet use the online payment services that we take for granted.

The big players in online payments, PayPal and Google Checkout both only service a restricted set of countries. While this remains the case these countries will continue to struggle to develop a strong online SME sector.

One has to ask why this is the case? Is it because of security concerns? This cannot surely be the case as payment services are now supported by a very sophisticated security infrastructure to alert administrators to potentially fraudulent transactions are the happen and to block these transactions if necessary. It is unreasonable to say you won’t do business somewhere because it has a reputation for high levels of fraud as the tools and procedures for dealing with this possibility are well established.

The only conclusion that can be drawn is that payment providers do not want to do business in developing countries because they simply do not offer the profits.

There is a small possibility that things may be starting to improve. PayPal has recently acquired Zong who specialise in payments by mobile phone. There service allows payment to be approved by text message. It’s a great start but there is still a long way to go.

Alongside this development virtual credit cards are becoming more common. These offer trmporary credit card numbers that are pre-loaded with a credit balance. Entropay for example offers these ‘cards’ in several countries including Haiti. While this is not an ideal solution as these card can be cumbersome to set-up and use, they at least offer an option for people in developing countries to buy online.