If 2012-2015 were the E-commerce years in Nigeria, 2016 has undoubtedly been the year of payments, with a few interesting start-ups springing up in the tech ecosystem trying to tame the payment beast.
One of those start-ups is Amplify which has recurring payments as its focus, and TECHnically talks to its co-founder, Segun Adeyemi, on his motivations, the size of the recurrent payment space, and other issues. Enjoy.
TECHnically: You studied economics. What has driven your interest in technology?
Segun Adeyemi: My initial interest in technology came as a result of curiosity and the willingness to create. I didn’t plan it, as my major career interest had always been finance. I have always looked out for opportunities to create and make things happen. I stumbled into technology while I was trying to build a game around my growing love for, and knowledge of soccer. During this period, I started learning and realising the impact of technology across different aspects of our lives and different sectors of the economy. I realised software was eating deep into everything. As I gave more attention to technology, I started getting exposed to opportunities in tech companies and met great tech entrepreneurs that I was able to learn a lot from. This helped in forming my thought process about the impact of technology. Now, I am totally sold on the power of technology to drive significant impact, solve major problems and create lasting value.
TECHnically: Why payments, specifically?
Segun Adeyemi: Thinking about it now, the choice of payments was a combination of many things – impact, interests, exposure/experience, skills, access, opportunity and grace. Impact – because we are privileged to be building an infrastructure that other businesses can leverage on to grow, that drives financial inclusion and stimulates economic growth. Interest – because it falls within the intersection of my two career focus areas of finance and technology. Experience – because between my co-founder and I, we have worked in finance, e-commerce, software development and specifically within the payment space in Nigeria. Skill – because we had some basic understanding and continue to acquire the skillsets needed to start and grow a payment company. Access – because we were fortunate to have people around who were willing to help us and partner with us to get started. Opportunity – because we saw a clear need and gap in the market and we are convinced we are in a good position to meet the need. Grace is the most important factor that has influenced what I am doing now because it wasn’t like I sat down and did a detailed SWOT analysis to decide on which area of technology I wanted to play in, several forces aligned and here we are.
TECHnically: How big is the recurrent payment space in Nigeria?
Segun Adeyemi: This is a recurring question that I am very happy to clarify. First, it takes the understanding of what are recurring payments to appreciate the size of the market. I did a short write up on my Medium page to answer that. (Read his article here)
Our research and estimation shows that recurring type payments in Nigeria are worth over $32 billion annually because there are loads of payments that happen now through traditional means that are recurring in nature. We are automating all payments that happen regularly such as pension contributions, insurance premiums, loan repayments, savings, tithes, monthly utility bills, cable and content subscriptions, internet and software subscriptions, membership fees and many more.
We have seen several traditional subscription-based businesses pivot and explore other business models just because there was no payment solution that effectively supports them. We are automating these processes and helping these organizations accept and manage these payments, thereby making life simple for such businesses and their customers.
Our focus is on ensuring that the subscription model becomes a simple and viable option for businesses in Nigeria. This extends beyond just a payment gateway that supports recurring and automated payments, but providing a platform with the unique tools and features tailored towards helping businesses and organizations that need to accept recurring payments.
TECHnically: What makes Amplify different from other solutions like Paystack, Simplepay, and others?
Segun Adeyemi: Amplify is the only Nigerian payment gateway that is built specifically for accepting and managing recurring payment. What this means is that while most payment gateways in Nigeria are focused on e-commerce, we seek to automate recurring type transactions that currently happen via cash, bank transfers, standing orders and postdated cheques.
Similarly, Amplify is not just a payment gateway but a CRM for subscription type businesses. Our platform allows them to create, view, upgrade, monitor, cancel, and analyze different subscription plans. Organizations using Amplify get to increase revenue and prevent involuntary churn. We do this by providing them with our Card Correction Technology that automatically retries failed transactions while informing the involved parties.
Another major difference is the fact that Amplify provides businesses with insights and analytics that are specific to subscription businesses, such as revenue forecasts, churn rate, MRR (monthly recurring revenue), customer loyalty reports and more.
Finally, Amplify is the only Nigerian gateway that allows businesses to connect their existing third party payment gateway (eg. Interswitch Webpay or Unified Payments) to take advantage of our other value added services
TECHnically: You are the chapter leader of Next Money in Lagos. How did that happen? What are the objectives of Next Money?
Segun Adeyemi: I got to know about Next Money while I was living in Accra through my friend Paul Damalie who happens to be the chapter lead for the Accra. I was involved in a few of the Next Money activities there and saw the need to bring such an initiative to Lagos. Next Money is a global network of FinTech innovators, conferences, communities, courses & collaboration programs. The objective is to reinvent finance through design, innovation & entrepreneurship.
TECHnically: How did you meet your co-founder, Maxwell Obi?
Segun Adeyemi: I met Maxwell during the recruitment process of MEST in Lagos, Nigeria. While waiting for our respective interviews, we were all having a chat and at some point, me and Maxwell struck a conversation and interestingly enough, we actually talked about payments then, without ever imagining that we would some day be starting a company together. I was working with Hotels.ng then. What stood out for me then was his confidence and understanding of the payment space in Nigeria based on his experience. We didn’t keep in touch after that chat until we both got accepted to be a part of the MEST programme in Accra.
TECHnically: How did you get into MEST? How was the experience?
Segun Adeyemi: I learnt about MEST while I was working with Hotels.ng and was impressed with the vision of the founder and opportunity to experience something different and meet with other smart young Africans who share the same ambition and interests.
The experience was a very intense and transformational one, I am continually grateful for the quality of people I had the opportunity to meet and work with as a result of my participation.
The support system from the Meltwater Foundation has also been very valuable to our business. Key support areas include technical, advisory, mentorship and key introductions.
TECHnically: You started SoccerQuiz in UNILAG with your coursemate. What happened to it?
Segun Adeyemi: A version of SoccerQuiz is still live at www.soccerquiz.com.ng. It was a side project that we tried to commercialise when we realised it could be a lot bigger but then we had exhausted our personal savings and allowances that we were using to run it. While looking for external support, the business model conversation started but we could not figure out a convincing and sustainable monetization strategy. We were basically haemorrhaging funds without a clear plan and we decided to take a pause. Perhaps a version of SoccerQuiz might be relaunched sometime in the future.
TECHnically: How many businesses use your platform right now?
Segun Adeyemi: We have over 300 businesses on our platform.
TECHnically: What are the cultural issues, to your mind, that prevent the shift to subscription based models?
Segun Adeyemi: These are largely due to the ownership mindset that is prevalent here, the lack of trust in our society and poor service delivery from a lot of companies.
There is also the issue of low and inconsistent income. People who subscribe for most products/services are mostly the middle-upper class and/or people who have regular sources of income. For most Nigerians, disposable incomes are either very low or inconsistent and therefore they would rather pay as you go.
However, there is a fast growing, sophisticated middle class, that already carry out one form of recurring transaction or the other, even if not online. There is also a large number of compulsory payments like loan repayments that happen on a recurring basis. I imagine that Nigerian returnees who are used to paying for goods and services on a subscription basis will be constantly frustrated if a solution like ours didn’t exist.
Also, there are a number of payment methods that now support online recurring payment. Regulatory policies around the cashless economy are now supportive of automated debit using these different payment methods and seriously driving the cashless economy. As the penalty on cash transactions continue to get stiffer, more transactions will happen electronically and the market will continue to increase.
More innovative solutions by businesses will also drive consumer adoption faster than anticipated. People will be driven to carry out more electronic transactions, when the solution is really worth it. For example, a lot of Nigerians were skeptical about loading their cards on an app before the introduction of Uber.
We believe there is a growing demand and the market is ripe enough to support recurring payments.
TECHnically: How receptive are businesses to the solutions you provide?
Segun Adeyemi: The reception from Nigerian businesses has been positive and encouraging. Most businesses are getting digitally aware and understand the need for innovation and automation across all their business processes. We have also been learning a lot and been deriving very valuable insights from our interaction with the various businesses across different sectors.
TECHnically: Is the Nigerian payment space better than it was a year ago?
Segun Adeyemi: Definitely. In building a technology ecosystem, there are a few fundamental infrastructures that serve as enablers. An efficient payment system happens to be one of those core enablers. As the Nigerian tech ecosystem grows, the demand for simple and effective payment solutions continues to grow. These growing, complex and specific demands are usually beyond the scope of the entrenched players that were built with a different approach and at a different time. This is the trend that we have identified.
Similarly, data shows that people are becoming more open to digital financial services. As at December 2015, the value of electronic transactions rose to N48.93 trillion up from N43.85 trillion in 2014, which represents an increase of 11.6 percent. Transaction volume also rose by 43.4 per cent to 162.59 million from 113.42 million in 2014. The Central Bank of Nigeria has also been paying impressive attention to electronic payments and actively promoting policies to stimulate a cashless economy by 2020 because of its obvious benefits.
Almost all commercial banks in Nigeria now have mobile applications or one payment product, they are more open and collaborative. GTBank’s 737 service is showing impressive numbers and other banks are launching similar services.
The introduction of BVN is one example that has brought about an increased level of security and harmony to online transactions and financial data that enables payment players to innovate with reduced worry about fraud.
It is in driving this cashless economy in Nigeria that we have carved a niche in the market to automate recurring type payments and champion the subscription economy.
TECHnically: Is the start-up life harder or easier than you imagined?
Segun Adeyemi: A lot harder, but I try not to think about it that way. I think it is a good “hard” because I am excited when I overcome challenges. Sadly, most of what makes it harder is not just the typical hard work of starting a business, but some external and environmental factors unique to starting and running a business in Nigeria and the space we are playing in. However, I try to always keep an open mind and not take myself too seriously because I also understand that hard doesn’t mean important and it is essential to learn from and enjoy the process no matter how difficult.
TECHnically: Have you always wanted to own your own business? Or did it happen when you saw an opportunity?
Segun Adeyemi: My passion is to build and help to build great companies in Africa that can make strong impact both within and globally. I am open as to the path that God will lead me to realise my passion. I can’t remember it being a very conscious desire to start my own business, I have only been very curious and always seeking to bring my ideas to life. If the way for me to bring my ideas to life is to start a company, then that’s fine by me. For Amplify, it was clearly because we saw an opportunity and the alignment of those factors that I mentioned earlier.
TECHnically: What have been your major learnings about Nigeria’s payment space since Amplify started?
Segun Adeyemi: First, there still exists a lot of friction that needs to be fixed, and there are seemingly “acceptable” excuses for these frictions. Secondly, the real competition and opportunity is in driving more adoption of electronic financial services.
TECHnically: And on that note, thank you for your time Segun.
Segun Adeyemi: You’re welcome.