Payment Gateways in Namibia: VCS vs Peach Payments - 2017 Edition

Ardi

A few years ago, one of the only ways to receive online payments in Namibia was through a company called 2Checkout. It was a good option, but it had some downsides: higher fees, minimum payout limits, delays due to international transfers and limited templating functionality. However, despite these downsides, 2Checkout offered Namibians the opportunity to receive online payments directly to their Namibian bank accounts without committing to monthly fees or a merchant account and with very little paperwork. This made 2Checkout a viable solution for many businesses in Namibia at the time (Namhost included).

Unfortunately, 2Checkout is no longer available to Namibians. 2Checkout’s pricing page no longer lists Namibia and an email to 2Checkout confirmed it. I would imagine it might be due to a decrease in the number of Namibians who use 2Checkout, which is most likely due to “Merchant Account” solutions now being available in Namibia. 2Checkout payments did not require a Merchant Account.

If a purchase is made via 2Checkout, the funds paid will accumulate in your virtual 2Checkout account. When you reach a certain threshold (back in the day it was minimum 300 USD) the money will be paid out to you via an Eletronic Funds Transfer. The money will literally be transferred from 2Checkout’s bank account, to your bank account. This was only done once a week on Wednesdays and the money would generally only reach you a week later.

A Merchant Account is very different to this. It acts as a processing facility which enables the merchant to accept credit card payments on their website or their app. This Merchant Account may be provided by the Payment Service Provider or directly by the bank. A merchant account is similar to a line of credit, which is why you have to go through an application process when you sign up. But it is through this Merchant Account that you are able to settle transactions to your bank account within 24 hours.

Virtual Card Services (VCS) is the only payment solution in Namibia that offers direct debits to local Namibian bank accounts using Merchant Accounts. There might be other solutions similar to 2Checkout, but as at the time of writing this article, no other company can currently do what VCS does in Namibia. VCS will help your business set up a merchant account with a Namibian bank of your choice, which will enable you to receive payments directly to your Namibian bank account.

Peach Payments, like VCS, is another payment provider that can work with a Merchant Account. However, they do not support payments to local Namibian bank accounts. This is likely to change in the future, but currently they can only deposit to South African bank accounts. There is also no ETA as to when that will change (you can sign up here to be notified when Peach Payments becomes available in Namibia).

The main reason Namhost uses Peach Payments (like we do here, here and here) is because of the slick payment widget they offer which also doesn’t require going off-site to complete the payment. VCS intends to have the same functionality within the first quarter of 2018 and I will definitely include an update on this article when the time comes (you can sign up here to be notified when VCS releases their own widget that doesn’t require going off-site).

Payment Provider Demos

We have created a demo site where you can see VCS and Peach Payments in action. You  can place as many orders as you like and you can use test credit card details to simulate a real payment! Now you can test out each payment option and decide for yourself what will work best for you!

Our Demo Store can be found here: https://www.nambuy.com

As at the time of writing this article, we have implemented 2 different payment methods. We are likely to implement more over time so that nambuy.com can become a reliable website to demo payment gateways and other e-commerce features for Namibian users.

If you are unfamiliar with these payment gateways I highly recommend heading over to Nambuy.com and placing an order using these fake credentials. It will show you what each payment method looks like and how it behaves once implemented, which is likely to play a role in deciding which option to use.

VCS vs Peach Payments?

VCS offers a wider range of services than Peach Payments and having been around longer, means they also service a much larger clientbase across a much larger geographical area. So if you are looking for a solution that stretches over multiple borders, or requires advanced routing options, or any other advanced requirement, chances are that VCS will most likely be the option for you. It might be best to get in touch with them directly to discuss your specific needs.

If we had to compare all the features offered by VCS and Peach Payments, this article would get way too long. So for the sake of simplicity, we are strictly looking at a very basic Merchant Account setup when in the table below, which is what most users will need if they want to receive payments on their website or app.

 

VCS

Peach Payments

Company Website

http://website.vcs.co.za/ 

https://www.peachpayments.com/ 

Pays out to:

Any Namibian and South African banks (and many others)

Any South African bank account

Namibian Banks from which you can get a Merchant Account:

FNB, Nedbank and Standard Bank
(Bank Windhoek coming soon)

None

South African Banks from which you can get a Merchant Account

FNB, Nedbank and Standard Bank

Nedbank

Requires Merchant Account?

Yes

(but also offers self-hosted option)

Yes
(but also offers self-hosted option)

Must go off-site to pay if not PCI Compliant?

Yes

No

Setup Fee

N$ 287.50 once off

R250.00 once off

Monthly Fee:

N$ 175.00 exclusive of VAT.

R300.00

Settlement Fee:

N$ 0.58c + 0.86% of the value of the transaction

N$1.50

Fees URL

http://website.vcs.co.za/pricing-namibia/

NA

Fees

If you, for example, sell electronics online, there is a good chance that your profit margins can be as low as 10% on certain items. With low profit margins it becomes increasingly important to understand the transaction fees you will be charged when allowing an online credit card payment on your website. Failing to understand these fees could easily result in pricing that could result in a loss.

The true cost of a payment gateway

If you had to sell 10 products at N$100 each, you would have a turnover of N$1000. How much of this would end up in your bank account? The payment gateway fees would be:

VCS:
    ( 10 x N$ 0.58 )  + ( 10 x 0.86/100 x 100 )
=  ( N$ 5.80 )  + ( N$ 8.60 )
=  N$ 14.40

Peach Payments:
    ( 10 x N$ 1.50 )
 =  N$ 15.00

As you can see, the difference in pricing is insignificant. It works out to about 1.5% of the total transaction, which is not very high. But unfortunately there is still one more set of fees that need to be taken into account: Merchant Account Fees.

Merchant Account Fees

You will need a Merchant Account for both VCS and Peach Payments. This account is opened with your Bank and works completely independent from VCS and Peach Payments. The Merchant Account fees depend on a number of factors, but unless you are doing very large volumes, it’s unlikely that you will be able to negotiate a better price. To give you an idea, this is more or less what you can expect to pay when you sign up for the first time:

Monthly Fee

N$ 150.00 per month

% of turnover on SA Credit Cards

3.75%

% of turnover on SA Debit Cards

2.75%

% of turnover on Foreign Cards

4.25%


Note: These are the base fees being charged by Nedbank in South Africa. Fees in Namibia might differ. Please contact Nedbank Namibia directly for a quotation.

So let’s look at our previous example of 10 purchases at N$100 per purchase. If we are lucky, all 10 these payments were paid for with Debit Cards. If that was the case, then the Bank’s transactions fees would be:

    10 x (2.75% of N$100)
 = 10 x N$ 2.75
 = N$ 27.5

Of the N$ 1000.00 that came in, N$27.5 will go the bank and N$15.00 to the payment provider. That means the transaction cost works out to a total of N$42.50, which means the total transaction fees were ultimately 4.25%.

But 4.25% is the best case scenario. What happens if all of the payments were made with Foreign Cards:
    10 x (4.25% of N$100)
 = 10 x N$ 4.25
 = N$ 42.50

Add the N$15.00 Payment gateway fees and you end up at N$57.50, which is 5.75% of the transaction.

This is why pricing on an online store is so important. If you are working with a 5% profit margin, you would have made a loss in this case. Even more so if you consider that this 5.75% does not take into account your monthly fees. You will need to make a few sales each month just to cover these monthly fees on top of the transaction fees.

Is accepting online payments really something I should consider?

It depends on your business, supplier costs, monthly costs etc, but here are some questions you can ask yourself to make the decision a little easier:

Will I make enough online sales in a month to justify the cost?

If you don’t make a lot of sales in the first few months, no problem. It can take time before you start seeing an increase in sales. But if you are confident that there is a good chance you will make enough sales, consistently every month in the long run, then an online payment solution is definitely the way to go.

Will offering online payments mean more of your clients will pay for your services?

There is no point in adding an online payment option if your clients will never use it. Your business might be set up in such a way that receiving payments online doesn’t make sense. Perhaps most of your clients pay you in cash, or perhaps you only get one or two large payments every month. Both these cases validate not implementing an online payment solution and there are many other cases like this. So despite many like myself who believe that all companies should move towards accepting credit card payments, there really are legitimate cases where it should be avoided. Make sure your business is not one of those cases.

What is the general consensus on buying online in your country?

Namibians have only recently started to warm up to the idea of paying online with credit cards. Which means that until now, Namibians would often prefer to pay via EFT even if the option of paying by credit card is offered. Many still do, because there is still a bit of a negative stigma around buying online in Namibia. Many still see it as being unsafe and this is despite the fact that buying with a credit card is usually safer than buying with cash.

If people don’t trust your business, or if they don’t trust something you offer, people will not only avoid it, but it could possibly change the perception people have of your business and not necessarily in a good way. For example, you definitely wouldn’t mind being the first company to offer credit card payments in your country, but you would very much mind if you are the first company in your country to lose thousands of dollars due to chargeback fraud.

Are there hidden benefits specific for my business?

Implementing a payment gateway means you need to implement an E-commerce solution that can manage the products or services you are trying to sell. Depending on what you choose, you could potentially solve, or at least reduce, efforts needed in other parts of your business. For example, if you choose a good billing system, you will be able to:

  • Generate invoices online: no more spreadsheets or invoice books
  • Automatically create recurring invoices: no more forgetting to send invoices on the right date
  • Reporting: instantly get reports and see how the business is doing

Receiving online payments does not strictly mean you have to have an online shop selling some or other product. It could be a much simpler setup. For example, you can install a billing or accounting solution like Freshbooks or even WHMCS and then configure them to allow online payments. You can then send out invoices from the backend and your clients can receive them via e-mail. These e-mails can then have a “pay now” link which could allow the user to pay the invoice. In this workflow you are completely skipping the traditional flow where the user would go onto your website and purchase something.

Whether you are a swimming coach, a hairdresser, a freelancer, or just about anyone charging money for services or products, chances are that you are sending out invoices and have clients that need to pay these invoices. Choose a complete billing system with online payments and you will be amazed with how much time you save and how your clients will love you for the convenience of extra features like paying online, downloading copies of their invoices etc.

Will it really be that difficult to add payment features to my site?

In some cases it will be especially easy to add payment features to your website. One such example is if your website runs on any of the solutions for which a module or plugin already exists. For example, if you are already using WHMCS, you can just grab the available module from VCS’s Plugins Page.
However, if you are using something like Drupal 8, for which no module exists, it might be more difficult to add a payment option because you will most likely have to develop a custom module yourself (or wait until VCS has developed one. The have developers constantly working on expanding their plugin range).

Do I have anything to lose?

The reality is that we are living in the digital age and if you aren’t offering online payments in your business, you are most likely never going to be able to grow your business past a certain point. It can be expensive to set up an online payment solution, but in most cases the benefits outweigh these costs, especially in the long run. Calculate what it would cost to implement the solution for 1 year and consider running a trial period for that year to determine the viability.

How much growth do I foresee in my business?

The key benefit of accepting online payments is scalability. I remember a time when I was doing 50 invoices a month, manually, using Excel spreadsheets. That was 15 years ago, but had I kept up with this, it would have been impossible to scale up past even 100 clients a month. It’s simply too much work managing so many invoices each month and it’s too easy to make mistakes when doing these operations manually. If you are spending more than 1 hour a month on creating or managing invoices, I assure you that there is a better way that could save you a ton of time, a ton of money and ultimately make your business seem a lot more professional.

Tip: Waveapps.com is a good free option for invoice management.

VCS in Namibia

With an outstanding track record as an international company and many years of experience in ecommerce, plus the added benefit of being the only company that settles payments to Namibian bank accounts, there is no doubt that VCS is probably going to be the option you want to implement if you are based in Namibia. So we dug a little deeper to see what else we could find out about VCS. Below are some of the answers we received from the VCS Tech Team. If you have more questions, please comment below and we will reply to your comment as soon as possible.

How has VCS grown as a company?

VCS started in 1996 and operates in South Africa, Botswana and Namibia. They are in the process of merging with PayGate (SA) and 3GDP (Kenya) to be branded as the DPO Direct Pay Online) group, which will have footprint in 28 African Countries. As the largest Payment Service Provider in Africa, DPO aims to provide the Merchant with a single integration allowing them to access online payment services throughout Africa.

Which Namibian Banks are Supported by VCS?

Currently VCS Namibia supports FNB, Nedbank and Standard Bank. Bank Windhoek will be added in the near future.
How long will it take to set up VCS and start receiving payments?

Turn-around times are dependent on the payment solution the Merchant selects. If the Merchant chooses to have their own Merchant facility, then VCS depends on the bank application process as well as the bank setting up the Merchant facility. This can take between 1 and 4 weeks in Namibia.
However, when the Merchant makes use of the VCS own Merchant facility, then we control the process and can have a successful Merchant up and running within 48 hours.

Does VCS offer support?

VCS has staff based in Windhoek that provide first level support and VCS provides 24x7 telephone and email support from their offices in South Africa (Johannesburg & Cape Town) and Nairobi, Kenya.

Does VCS offer any Bitcoin products?

Currently VCS does not support Bitcoin. VCS will continue to monitor Bitcoin activity as well as any other innovative payment solutions and should they feel that Merchants will benefit from these solutions, then VCS will provide them. The Payments Industry is ever-evolving and it is in VCS and their clients' best interest to stay abreast of new technology.

Conclusion

VCS is slightly more affordable than Peach Payments. They also support both South African and Namibian bank accounts. They also have a much bigger African footprint than Peach Payments. This makes VCS the best solution for most Namibian businesses and a very good option for people in other African countries, including South Africa.

The only downside to VCS is that they do not have a Javascript payment widget that does not require you to go off-site. If the user journey is important to you, then you will either have to wait until VCS adds the equivalent of Peach Payment’s “CopyandPay” solution, or you will need to find a legal way to get a bank account in South Africa.

Regardless of the option you choose, it is extremely important to consider allowing online payments for your business as it could make your business more scalable and ultimately more profitable. Keep in mind that whatever your business is, you are most likely sending invoices to clients. Which means you are in a position where you could make things easier for your clients by allowing them to settle invoices online and by streamlining this with a billing system. All of this could save you a tremendous amount of time and effort, and money.

Contact Namhost if you need any assistance getting online payments on your website or simply leave a comment below. We make an effort to reply to all comments.

About the Author
Ardi
Ardi
Armed with a degree in Computer Science and over 15 years of experience building applications for the web, Ardi functions as the go-to guy for all technical problems that might arise at Namhost. His problem-solving skills are second to none and has been critical to the success of Namhost. Although very skilled in a variety of frameworks such as Laravel and Zend, Ardi has become an expert in Drupal.