Online payment gateway WorldPay will no longer offer its service locally next year.
In an e-mail sent to clients, the UK-based company announced that, due to economic uncertainty and new regulations, the service would no longer be available to SA, South Korea and Mexico from 5 January 2005.
WorldPay client David van der Want says the announcement was totally unexpected, adding that he had only recently signed up with the company. "I`m quite ticked off, actually. I applied two months ago, have only been trading for two weeks, and then I get this e-mail on Friday afternoon. It is frustrating that I went through with the whole application process for nothing."
One of the main advantages for local small to medium enterprises looking to sign up with WorldPay is the relatively simple registration process, says Van der Want. "If you want to use local banks, the process is too complicated and will probably take more than two months."
Arthur Goldstuck, MD of research firm World Wide Worx, says WorldPay`s withdrawal could also be attributed to a lack of interest. "My impression is that SA is very low on WorldPay`s radar. I have been unable to get hold of someone there, despite trying for two months now."
Van der Want agrees, adding that it is important for SA to play catch-up in the e-commerce environment. "Our market is not seen as a viable one. We are already lagging behind and are not really doing much to change that."
In the statement issued to customers, the company attributed the main card scheme rules from Visa and MasterCard as one of the key reasons for the withdrawal. "These govern the way we do business outside of the European Union (EU). These rules demand that in order to continue our business in any country outside the EU, we must enter into an agreement with a local bank.
"We are sorry to have to inform you that your business is based within a country where we can no longer offer our services, and therefore we are sending you this e-mail as 60 days` notice of termination of your account. Your account will be closed on 5 January 2005."
According to the statement, the majority of customers` existing 12-month contracts will have expired by this time, and money owed would be refunded "in accordance with our normal procedures".
In order to set up his pre-owned CD shop, MediaXchange, Van der Want says he had to provide a fairly substantial amount of money upfront. "I paid about R4 000 in total, but I won`t be getting it all back. There is a R500 set-up fee and a pro rata portion of a further R1 500 that will be paid to them."
Van der Want says he will now look to post a gateway with one of the local offerings. "It might be marginally more expensive, but from what I understand, the changeover will be fairly seamless."
Super-merchants in the local market
As a super-merchant, WorldPay was likely viewed in a negative light by local banks, says Goldstuck. "Super-merchants are able to offer credit payments to pretty much anyone.
"For local banks and merchants, risk management is the be all and end all, and when this is limited, banks get very skittish. From the interaction I have had with banks, super-merchants are heavily discouraged, and they say such merchants are expected to disappear in the future."
The fact that Africa as a whole is viewed as a high credit risk area has merely exacerbated the situation, he adds.
While no current statistics on the number of existing WorldPay clients could be attained, Goldstuck says the company did have over 100 local clients two years ago.
David Liu, MD of local commerce service provider Setcom, says WorldPay does not have a significant presence in the local market in terms of client size, adding that its departure from the market will not affect existing competitors.
At the time of publication, WorldPay could not be contacted for comment.
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