[kictanet] KENYA’S ECONOMY HELD BACK BY LACK OF ONLINE PAYMENT AUTHORISATION SYSTEMS

[alice]

 KENYA’S ECONOMY HELD BACK BY LACK OF ONLINE PAYMENT AUTHORISATION SYSTEMS
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The Kenyan Government is putting its country forward as a place that is 
open for business. It is moving to privatise both Telkom Kenya and 
divest itself of Safaricom. It has moved with considerable speed to put 
in place its own fibre project TEAMS. But parts of the private sector 
are having difficulty keeping up with the idea of Kenya having an open, 
modern economy.

Although there are a couple of new entrants in the country’s banking 
sector, it is largely dominated by international banks whose managements 
defer to head office on innovation. This is going to cause the country a 
problem if it wants to continue to remain competitive. It needs to be 
able to offer its visitors the ability to pay for flights, hotels and 
safaris online. If you book a Kenyan hotel, you still cannot pay online 
for the booking.

Sadly things have only moved on a little since Kenya Airways launched 
its very successful online payment system using a South African bank. 
Although many banks can issue credit cards, only a limited number can 
authorise transactions and they have not shown any interest in setting 
up the “back-end” payment authorisation systems required for online 
transactions.

Speaking at last week’s e-tourism conference in Mombasa, Kenya’s Tourist 
Trust Fund CEO Dr Dan Kagagi said that the industry and Government were 
lobbying
the banking sector to allow online payments. Whereas once the credit 
card companies were the obstacle, the point of “no change” has moved to 
being the banks. According to Kagagi: "Already a number of credit card 
companies are willing to work with us to ensure that online payments 
become a reality."

Tourism and Wildlife Assistant minister, Raphael Muriungi, speaking at 
the same conference urged the industry to utilise online 
technologies:"We are all learning of the rapid and unprecedented changes 
that ICT is creating in global tourism and have realised if all players 
fail to embrace the web and new technologies then we stand to lose our 
ability to communicate and do business in a changing market," he said. 
Perhaps his comments should have been directed at the banking sector 
that are now proving to be the obstacle to change.

The banks fear fraud but this seems a rather lame excuse as in the first 
instance most of the potential buyers will be tourists coming from 
developed countries where fraud rates are considerably lower. Close to 
70 per cent of travellers regard the Internet as their primary and in 
many cases only source of information on tourism. About 100 million 
travellers now use the web to book holidays and travel thus making it 
vital for Kenyan tourism to be visible on the Internet. Kenya 
undoubtedly competes with South Africa for visitors, particularly in the 
wildlife safari sector, and there is no difficulty booking and paying 
online for a wide range of products in South Africa.

Despite being repositories of citizens’ money, the banks have been 
remarkably slow to react to the signs that there is an emergent middle 
class. It is projected that by June 2007 there will be around 100,000 
credit card users. It sounds small but it is considerably more than in 
many other African countries. In addition, there are more than 1 million 
debit cards that can only be used if the card holder has cash in his or 
her own account. Surely the latter can provide a fairly low-risk way of 
introducing online payment for Kenyan citizens.

When TEAMS and the other international fibre connections arrive at 
Mombasa, the price of international bandwidth will go down. This should 
be one of the building blocks for creating new services and applications 
that users can begin to start to use. Another building block must surely 
be the ability to authorise online transactions and Kenya’s banking 
sector needs to wake up to the changes that are happening in the 
country. However, this is not purely a Kenyan problem as there are other 
countries on the continent like Ghana where a similar lack of online 
payment authorisation is holding back the development of local global 
businesses.
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 From Balancing Act