Ecommerce in Nigeria: why are cardholders choosing to pay cash on delivery? + more questions


Hello, everyone.

Sorry for the length. TL/DR: If you shopped online at Jumia/Konga, did you pay online before your order was deliver? Why/why not?

So I keep reading about Jumia, Konga, and all these new ecommerce plays popping up in Nigeria. But I was under the impression bank penetration is low, card/internet banking penetration is low, and even if people have cards/online banking accounts, the vast majority of people still use cash for e-commerce (which is almost an oxymoron for me but that’s besides the point). I think Jumia/Konga personnel have said in past interviews that their orders are mostly cash on delivery.

Pretty interesting topic so I thought I’d put it to the cabal behind the Cabal and see. I guess I’d like to hear views on this generally. If you’ve paid for an order on Jumia/Konga before did you pay in advance with card/internet banking/quickteller or cash on delivery? Why? What do you think are the key things preventing those that have bank accounts/online banking/cards from paying online? Does the threat of fraud/insecurity still loom large? Is it not a fraud/thing thing but more of a trusting Jumia/Kong to deliver and deliver the right product thing? Is it that even if all cardholders paid online, penetration is so low that that doesn’t really make a big impact?

I know we celebrate Jumia/Konga/and all but I’m thinking it must be pretty hard to do cash-based ecommerce at scale sustainably. I know both companies are in growth stage <3 yrs old, but nonetheless both are also not (yet) making profit (I believe). And if you contrast with ecommerce in other markets, Amazon for instance, a big boost to the business model is getting paid online by customers before having to pay suppliers (e.g., Google “Amazon + negative operating cycle”).

Sorry for the length, but super interested to know thoughts and experiences. Thanks!

Konga is shutting down its desktop site for five days

This is not just a Konga or Jumia problem, it is a problem for any tech company that is going to have to receive payments. That is why there aren’t many digital product companies in Nigeria.

Game developers, web service providers, subscription/recurring payment services are a huge nightmare because you can’t do cash on delivery for non-tangible products.

Personally, at (our online Gospel message marketplace for churches and speakers) we have resorted to voucher production but that is because we know exactly where and when to find our customers (churches, during service). Other service providers are not so lucky.

People just don’t trust cashless payments that much (yet). When I told my mum she had to use her debit card to purchase messages on my site, she bluntly shot it down.

This is not something the tech community alone can do. We need something that will drive mass implementation of cashless payment across all economic sectors. That is why I suggested this device. I think it will significantly increase adoption.


Most times I use cash-on-delivery and here’s why:
Though, I trust the online payment platforms to protect my account details, I don’t trust Konga/Jumia to deliver as promised, so I use cash on delivery because I know I can easily cancel my order without any liabilities. Trust me, the last thing you want is for your money to get stuck with any of these guys, it can take weeks to get your money back. I’ve been disappointed a couple of times on both channels, they have ineffective inventory system, although, I think Konga is getting better for goods purchased directly from them (the merchants, that’s another story).

Generally, Nigerians do not trust using their cards online, as in I have very tech-savvy friends that still will not use their cards to make any purchase online, some even have separate cards, one for online and another for other offline activities. In contrast to online payments, POS terminals are actually doing very well, and I just don’t understand why people will trust POS terminals (which can be more easily altered, hypothetically) over an interswitch payment gateway.


I actually think Cash-on-Delivery is a major breakthrough in solving a lingering problem of trust in this country, I’m not sure who started it, but I think I first saw it on Jumia (then Kasuwa). And Cash-on-Delivery doesn’t always mean cash, sometimes, it means POS-on-delivery :smile:


@thought you’ve raised some points in your post.

I noticed that you used the too long; didn’t read internet slang wrongly.

Firstly it is tl;dr and not tl/dr.
Secondly, you are not the one to be writing it. Rather we reading the your post are supposed to write tl;dr.

tl;dr (abbreviation for too long; didn’t read) is an internet slang expression commonly used in discussion forums as a shorthand response to previous posts that are deemed unnecessarily long and extensive. Due to its indiscriminate usage by many, tl;dr is frequently considered as spam or meaningless replies by both those unaware of the term and those who are familiar with the meaning.


@Obi_Ik That’s a great point: the issue is bigger than ecommerce and potentially more problematic where you have digital products rather than physical goods. Now I understand the PAYPAD idea more clearly…I think it’s a decent enough concept, getting it into enough households could be a challenge though, but it aligns with @logbon72’s view that people trust POS-type devices more than online payment gateways.

@logbon72 Sounds like trust of the service providers keeping their ‘promise’ could be as big an issue as, or potentially a bigger issue than, safety of bank/payment details. And good catch on POS/COD…I think POS on delivery has similar risks to pure cash on delivery at least as far as no buyer commitment though.

@Okeke_Arthur_Ugochuk Thanks for the correction. How would you “tl;dr” the original post? :smile:

So some of this, especially @Obi_Ik’s contribution, has me thinking of how Uber Lagos is faring. They don’t do cash (I know Uber at large is testing this in Hyperabad) and users apparently trust them with card details upfront and with service delivery, but then again the whole ‘you only get charged once you reach your destination’ might mean it’s not a good comparison. But there’s probably lessons to be learned as far as getting a user base comfortable with online payments.


Cash on delivery,

I’m not scared of paying with my card, i have my card stored on many online system for recurring payments
I’m scared of the shitty customer support in the country
I’m scared if my item doesn’t get delivered or it goes out of stock( Jumia i’m looking at you) i would have to spend my own air/time(weeks) chasing down these people to issue a refund!

So i always pay cash on delivery. Right now i even have a Jumia representative who handles my purchases. If i ever need to process a return at least, someone else handles that headache for me.


The tl;dr label is sometimes used constructively by an author to introduce a short summation of a longer piece.[3] However, it is all too often invoked as a tactic to thwart collaborative editing, or, worse;_didn't_read

It’s an internet slang and it evolves


It could be issued from banks. Maybe, together with the ATM cards for their new customers.

The problem I’m seeing is that it may take a while before CBN and card processors settle on operation frameworks and regulations and those could take time. That is where there might be a big hiccup.


Infact, i don’t think it affects Jumia and Konga as badly as it has almost crippled other non-tangible services. Konga and Jumia should cry me a river! The MUST have to deliver the product, which means that someone from them MUST definitely reach the customer so they still get to collect payment. Only thing is that it might add extra overhead but as far as I’m concerned, that is a good problem to have. It’s so good that has even built a business out of it. Abeeegggggiiiiii…
The only non-tangible web service with strong payment dependency that has managed to execute magnificently without card payment is Nairabet (followed by the 10,001 other betting sites) and they exploited the advantage Gospoteric is looking to use: they have almost all their targets gather in one place (viewing centers during football match) so they set up strong presence and agents around there who collect payments. I hear the majority of betting companies are profitable.

But what does the game developer that wants to make in-game sales do? edu-tech, health, content and entertainment sales and subscription services? What do they do? Jumia, Konga, Uber, even IrokoTv should all park well, serious headache dey worry some of us!


I hear using your platform’s provided payment system for in-app purchases work just fine. Some businesses have gone as far as replacing their own payment integrations with these (Case in point: Evernote subscriptions). I am not sure how your services are delivered, but if it’s via a mobile application, then you already have an option you definitely shouldn’t hide from your users. We will all be better for it in the long run.


I’m not sure i understand you!


Not so ELI5:
Game developers on the Android platform can take advantage of that little feature that helps collect payments from users on their behalf. Same goes for iOS/OS X, Windows Phone/Windows. Even if you are providing alternatives to card payments, don’t leave this implementation out. The sooner we stopped overstating people’s distrust in card transactions (because I believe inconvenience plays a part as well) and still provide them with the option (besides alternatives), the better for everyone in the long run.


Cardholders will always choose to pay cash on delivery, the reason is inbuilt something we all know but may have forgotten, it’s the TRUST ISSUE. Nigerians we were thought not to trust anyone with our money from the time we started nursery school.


with the current technologies (e-Payment systems/platforms) that is in play in Nigeria, only education/awareness and time can increase online card payment adoption. Except we innovate around the “I no trust am” mindset, considering accessibility and cost of technology ownership.


Honestly, I think by continuously bending over backwards to cater to customer paranoia we’re preventing ourselves from progressing.

Believe it or not, you sometimes crappy goods from Amazon (see all the products that have one or 2 stars and countless negative reviews). Instead of saying, well, don’t pay till you get it and like it (which is a ridiculous strain on their resources), they encourage people to a) return the item b) leave bad reviews for that item c) contact their staff and get quick support.

No service is perfect, and when you’re dealing with third party suppliers the margin for error is even higher. This is the risk associated with not getting up and going to the store yourself. I don’t think I’ve ever done cash-on-delivery. It’s a pain. I have to have cash on hand–which I almost never do– and I have to be there to pick up the item. Pass. I’m doing online purchases for the convenience.

That’s a damn shame. They’re the ones that are supposed to know better and teach less savvy people how to use their cards safely online. My dad is a tech guy, mostly and had tons of cards given to him by his various banks. Up till last year he still made me pay for things online for him out of fear. One day I just sat him down and guided him through the whole thing and assured him I’ve been paying online for years. He’s paying online for his own stuff now.

What needs to happen is local retailers and banks need to get better at issuing refunds and resolving payment issues. I’ve gotten refunds from Amazon, they happened within days. And seeing as my bank is GTB, it’s proof that our banks are capable of doing refunds on time, it’s the retailers that are not doing the right thing quickly/being transparent about stock issues. Instead of patching up a broken system, they need to fix it. We need to get them to fix it.


@thought Onyeka, you are spot on. The cash on delivery option is not allowing us progress. The online store I work for- started out with the cash on delivery option. This became a problem because most courier companies didn’t want to collect cash for us. We got angry and yanked that option off and sales haven’t been affected one bit.

If Jumia and the likes yank off that option, I can’t bet their service will improve. Invetory will be better managed and refunds will be processed very quickly.


That is not even possible. Maybe you need to take a look at CBN figures and see how low the ratio of cashless transaction is to total transaction. And you want them to confine themselves that little margin?


The CBN figures are on a broad scale. If you are a shopping on the internet, you should be ready to pay on the internet. I wish one of either Jumia or Konga can take the risk, they might lose customers in the short term, but watch it help their business scale up in the long run.


…and I’m sure you will also want Nairabet/1960bet to dismiss all their agents all around the football viewing centers and insist on card deposits only right?

That’s would be very noble mehn but it sounds like what an activist will do not a business, man. When it’s not like you are a government mandatory service!


Strawman argument. Betting sites aren’t doing home deliveries.

The original question was: why are cardholders choosing to pay cash on delivery? Implying that this topic was aimed at people who buy with cash when their cards are available.

Regarding people that don’t have cards, there needs to be a concerted push to bank the unbanked because if you have a bank account, don’t have a debit card and still want to use the internet for payment, you’re just being difficult.

For instance, many banks have been pushing their customers to withdraw from the atm instead of the banking hall. There was the usual pushback, and sure, it’s not a 100% thing yet and probably never will be, but there are more people outside than in. People don’t like change. Especially, the less educated. Look, I’m not trying to solve all of (or any, tbh) Nigeria’s cashless payment problems, but come on. Instead of throwing our hands in the air, maybe it’s time to corner more people into using their cards.