Even if a bank does agree to provide a business with an online merchant account, it's often on terms that the business isn't prepared to accept. One of our clients, an airline, was so appalled by the terms on offer from their own bank that they chose to register a new business offshore instead - and they're not the only ones.
The trend is definitely for the more affluent businesses to set up shop in Europe. There are some initial hurdles to overcome in registering the business, but once you've done that life is much easier all around. You can get the payment facilities you need at much more favourable rates.
Smaller businesses often turn to "super merchants" who make their own merchant facilities available to others - but the costs are high. People are being charged exorbitant fees and the payment cycles are notoriously bad. It can take as long as 30 days to get your money out, which kills cash flow.
With African businesses facing these hurdles, gaps in the market are often filled by others instead. African entrepreneurs are being denied the opportunity to market their own goods to the world on a fair basis. As a result, they can easily be held hostage by middlemen who have much easier access to all the facilities they need to sell globally.
The losses to the continent are numerous: we're losing out on tax revenue and on reinvestment in local business growth. Just as important, we're losing out on opportunities to learn how to operate in a global marketplace. We need much more competition and innovation in the banking sector, and more pressure from governments to encourage their banks to modernise.
