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Narrator: Port Harcourt, Nigeria, Saturday March 25 2017. Chukwuma Eleje, father of four, says goodbye to his family as he sets out to make deliveries for the day. Chukwuma works for one of the third-party logistics partners of eCommerce giant, Jumia. But little does he know that it’s his last goodbye.
Chukwuma ended up being murdered by 2 young men who ordered 2 iPhone 7 devices using Pay on Delivery, a popular payment option on Nigerian eCommerce platforms. After brutally snuffing the life of Mr. Eleje, the young men tied Chukwuma up and stuffed him into a septic tank.
The unfortunate incident happened at a time when Nigerians were still coming to terms with online shopping. Pay on Delivery was the preferred option, given the level of distrust and fear they feel. But the murder incident didn’t look good on the industry.
The question is if they took Pay on Delivery out of the equation in those early days, what were the chances of survival for eCommerce businesses in Nigeria?
Naturally, these platforms began to explore safer options as it became clearer that Pay on Delivery wouldn’t be sustainable in the long haul. Soon, escrow services became the perfect replacement but they were quite unpopular at the time.
Somewhere in Ghana in 2017, on the floors of the Meltwater Entrepreneurial School of Technology (MEST) accelerator programme, three Nigerians, Ehi Aigiomawu, Ibrahim Oladele, and Tomisin Adeshiyan came up with the idea for a bespoke escrow service. They named it Vesicash. Globally, the eCommerce sector is predicted to be worth $6.5 billion by 2022, and Vesicash plans to make it safe for Nigerian online businesses
Ehi Aigiomawu: We found out that buyers could not trust the sellers to deliver the right items, so they would prefer Pay on Delivery instead. And sellers, on the other hand, people who sell, are not really convinced that “oh, if I ship this item, am I really sure this person will pay me? Won’t it be an issue later on?”. So most of the time, this was leading to lots of unfulfilled orders. So how do we solve this problem? We knew that the main issue that these two people — the buy and the seller — had was trust. So they couldn’t trust each other. So we asked, “how could we build a platform to foster trust between these sets of people so that they can transact smoothly?”
Narrator: That’s Ehi Aigiomawu, Vesicash Co-founder and Chief Technical Officer.
Ehi Aigiomawu: We did a couple of research in different spaces, and we found out that the problem was not just in the eCommerce space, it was also in the freelance sector, it was also in the real estate sector, and in other sectors too. So, we narrowed down and we decided that we’re going to solve this problem, and we decided that escrow was a way for us to solve this problem, to foster trust between buyer and seller. So, we immediately registered the company called Vesicash with the sole purpose of guaranteeing payment security for digital transactions across Africa.
Narrator: So, they pitched the idea and it sounded good.
Ehi Aigiomawu: MEST liked it but then, we had to come back to Nigeria to validate the idea… MEST is in Ghana. Nigeria is a bigger market than Ghana so we had to come back to Nigeria, to actually validate the idea here in Nigeria, to ensure that it’s actually a problem that is not just in Ghana but, businesses in Nigeria also face similar challenges.
Narrator: With the feedback they got from MEST, and on returning to Nigeria after the one year programme, they built the first MVP.
After testing their MVP in the market, the Vesicash team integrated the feedback into rebuilding the product. All these took place within the last quarter of 2018.
With help from two business and product oriented individuals, Ehi, who happens to be the only one with the software engineering skills, officially launched Vesicash in February 2019. Ibrahim is the Chief Executive Officer while Tomisin is the Chief Product Officer.
So what exactly is Vesicash’s value proposition?
Ehi Aigiomawu: It’s an end-to-end infrastructure that allows people to make and receive escrow payments. We have a set of APIs that any business from any sector can integrate. We also make provisions for other kinds of interfaces, like SDKs and widgets, that can also be plug and play into your app and use directly even if you don’t know how to use APIs.
Narrator: From Ehi’s description, it is clear that Vesicash runs both B2B and B2C models.
On the consumer side, one-time users can generate a single-use link, this option is called the Instant Escrow. Similar to that, there’s another feature that comes in handy for WhatsApp and Instagram merchants, Trizact Payment Link.
Not only Nigerians enjoy Vesicash services, it has users from Kenya, South Africa, Singapore, the UK, Canada, and other parts of the world.
Ehi confirms that most of Vesicash’s users are businesses cutting across legal firms, health, eCommerce, real estate, lifestyle, and agriculture within and outside Africa. Among the 300+ monthly users are Lagos-based lifestyle brand, May Anthony; Nigerian medical equipment store, EveryMedical; and African Things.
Vesicash operates a flexible commission-based model depending on location.
Ehi Aigiomawu: For customers that are outside Africa, we charge them 5% for every transaction that happens. For customers within Nigeria, we charge them 2.5%. We also have a couple of clients who have white-labelled our solution, so for those, we have a different pricing model.
Narrator: Apart from MEST’s investment in 2018, the startup is in the process of raising another round. Meanwhile, the startup has also closed an undisclosed round led by Ingressive Capital.
Ehi says Vesicash has been experiencing steady growth, in the two years since it kicked off operations. In her words,
Ehi Aigiomawu: The growth rate of our monthly revenue is between 30% to 45%.
Narrator: Of course, given the novelty of escrow services in Africa, adoption was slow at the start, but Ehi says the situation has improved. After all, if you search the Internet for escrow services in Nigeria, Vesicash is one the top results.
One challenge the startup is looking to surmount is getting talents with the required skill sets to join the team. As a long-term solution, Vesicash is in the process of building a community providing on-demand talent.
It is noteworthy that Ehi’s first foray into entrepreneurship was to organise training sessions for university students interested in tech.
Ehi Aigiomawu: My first startup was basically to train undergraduate students. The idea was to train undergraduates and equip them with software development skills, so they could also get employment. The whole point was to solve unemployment issue in Nigeria.
Narrator: Not hiding her worries, Ehi hopes no regulation comes up in Nigeria to adversely affect the business. As the startup eyes more high-end users to boost revenue, it will continue to work towards its lofty ambitions at launch.
For Ehi, Vesicash has an edge in the Nigeria market because it offers services that stand it out among competitors.
Ehi Aigiomawu: One thing we’ve been able to do is to understand that escrow needs are different across different sectors. Even Nigerian banks are providing escrow services to some degree. We understand that all of these players are there but the point is we have been able to distinguish ourselves by providing technology that, no matter where you are on the journey, you can plug in escrow from anywhere. So it’s not restricted.
Like I said, the core of our product is flexibility. It can be used by anyone in any sector, there’s no restriction. Most other products that we have locally, there are just escrow products defined in a specific way. So they are rigid; they’re just built to be used in one specific way. If you are not using it in that specific way, you cannot use it, right?
But for us, the fact that we can understand the people we are dealing with, we understand that needs are different, we’ve been able to position ourselves in a way that anyone in any sector can basically utilise our escrow technology.
Thank you for listening to Built In Africa.
This script was written by Oluwanifemi Kolawole and edited by Muyiwa Matuluko
Research and interview by Oluwanifemi Kolawole
Sound design by Oghenekaro Obrutu
This is a production of Techpoint Africa
I am Oluwanifemi Kolawole
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