A Q&A with DPO Group, the largest pan-African payment service provider

Offer Gat, Co-Founder and Chairman of DPO Group, the largest pan-African payment service provider, explains his passion for empowering enterprises through ever-advancing technology

“Throughout my career, I have been focussed on value creation and believe that the most effective way businesses can create value in society, especially in emerging markets, is through offering increased employment and training opportunities and providing young people with the tools to succeed. Finding sustainable ways to help businesses grow is what drives me to this day.”

For Offer Gat, career fulfilment is about more than running his own successful enterprise.

Impassioned by the ability of his company to empower tens of thousands of businesses across Africa to trade more easily, the Co-Founder and Chairman of payment specialist DPO Group is as motivated today as he was 13 years ago when first setting up.

The rapid advance of technology, an increasingly aware consumer base and growing corporate interest in Africa’s payments space have brought the region to what Gat sees as a transformational tipping point.

In the following Q&A, he gives his take on the ever-evolving payments industry and what DPO Group is doing to open up opportunities for 100,000-plus enterprises.

Africa Outlook (AfO): Why did you decide to create DPO Group in 2006?

Offer Gat (OG): I co-founded DPO Group in 2006 along with current DPO CEO, Eran Feinstein, in response to a gap that we identified in the African payments market. At that time, online payments were being widely used elsewhere in the world and ecommerce was booming, but in many parts of Africa paying online wasn’t an option.

While East Africa is known today as a leader in mobile money, there wasn’t much broad knowledge then around online payments and there was a sense of mistrust about paying an African company through an online platform. However, the need was there, especially amongst small businesses. Eran was approached by a Kenyan airline who needed the technology to be able to process bookings online from their overseas visitors, and when we found that local banks weren’t able to offer this service, we decided to develop the technology ourselves.

Now, 13 years on, we operate in 18 countries across Africa enabling 100,000 businesses to make and receive secure payments, and to grow their businesses through ecommerce. This achievement represents much more than just business success, it also has a significant impact on the African economy, connecting African businesses on a pan-African and global level, enabling them to develop much faster.

AfO: What is your take on the continent’s payments scene at the moment? What, in your opinion, are some of the challenges and opportunities facing companies such as yours?

OG: In terms of opportunities, we’re currently seeing a marked increase in M&A activity in the global payments sector, as well as continued home grown African fintech innovation. It’s worth remembering that during 2018 alone there were 20 million new unique mobile subscribers in Sub-Saharan Africa, bringing the total to 456 million. 23 percent of the population access the internet via mobile regularly and the subscriber penetration rate is still only 44 percent.

As digital technology is embraced further, we expect to see more and more collaborations between key players in the payments sector and those in the banking sector as they continue to provide levels of innovation that customers expect. There is no doubt that technology will continue to disrupt and evolve the way we pay and how payments are accepted, in Africa in particular, so we’re very excited about how this will enable more people to be financially included and the positive effect this will have on economic growth.  

The main challenge affecting the payments sector in Africa is the lack of consistent digital infrastructure on the continent. However, in the long term I’m optimistic. Cellular operators are beginning to take steps to improve their networks. In fact, according to the latest GSMA Report, mobile operators in Sub-Saharan Africa will invest $60 billion in their networks by 2025. I also hope to see governments across the continent beginning to invest directly and indirectly in infrastructure. Further investment into reliable digital infrastructure has the potential to revolutionise the African payments sector and strengthen economies.

AfO: I see that the acquisition of PayFast has taken your footprint to over 100,000 merchants. What are your ultimate goals regarding the growth and reach of DPO Group?

OG: The demand for secure, reliable and effective payment processing in Africa has grown rapidly and continues to grow. Since our inception in 2006, we’ve gone from a two-man operation to a pan-African payments service provider with over 300 employees with a local presence in 18 countries across East, West and Southern Africa, and we plan to continue our expansion into Francophone West Africa. Our medium-term goal is to be present in 28 African countries in the next two years, but ultimately, to be present everywhere on the continent, enabling online payments to merchants of all sizes.

AfO: How do you plan to achieve these objectives?

OG: Our aim is to continue to innovate and develop the range of services available to our merchants to ensure that we are a step ahead of ecommerce trends. To do this we invest time and energy into attracting the right human talent into the business and nurturing that talent. Hiring and training local teams to international standards is key to our growth strategy as we often hire in countries where knowledge of payments is in its infancy.

We believe that people are our most important asset, and we invest a lot of time and resources into training and developing our employees. The recent introduction of our Employee Stock Option Programme is testimony to how important we believe it is to nurture and retain our talent. We have also grown through strategic acquisition – prior to July’s announcement of our purchase of PayFast, we acquired PayGate, VCS, Paythru and SiD (all since 2016), and acquisitions will continue to be a strategic part of our growth plan and evidence of our commitment to developing payment solutions for Africans.

AfO: How important, generally, is a fluid payments sector/process to driving economic development across Africa?

OG: According to the World Bank, over half the Sub-Saharan population is unbanked, i.e. doesn’t hold an account at a bank or other financial institution, and this lack of access to finance is a major factor holding back economic development. The introduction of mobile money transfer services, such as M-PESA, has completely changed the picture. A quarter of our transactions out of South Africa are now made via mobile money and we’re the only payment service provider currently offering cross border payments via mobile, which has been particularly useful for SMEs looking to reach new markets for their products and services.   

A fluid and easy payments process is essential in order to facilitate ecommerce opportunities and thus economic growth and, in fact, by providing the same access to payment services it levels the playing field between small and large businesses.

But even more important than speed and ease of making payments online is the need for security. This is our number one priority. DPO holds PCI DSS Level 1 Certification, the highest level of certification as set out by the industry standards, in each of the countries in which it operates. And we use a highly sophisticated fraud prevention and risk management system developed in-house and managed around the clock.

AfO: What more needs to be done to improve cross-border payments and monetary transfers around the continent?

OG: As previously mentioned, the lack of a reliable payments infrastructure across the continent is a major challenge for the payments industry to overcome. Another is the existing restrictions in many African countries on inflow and outflow of foreign currency, which we hope to see eased in time.

AfO: Are you optimistic for the future development and roll out of payment solutions across the continent and the role this can play in developing the economies and societies of African nations?

OG: Absolutely. Payments solutions have the capacity to transform the African economy, as has been the case in other parts of the world. Payment processing technology allows millions of businesses the chance to expand their sales substantially, including transacting across borders, opening up new commercial possibilities for businesses and individuals. 

I would go so far as to say that a well-developed payments system is critical to economic development. According to the World Payments Report 2018, by 2021 non-cash transactions in emerging markets, currently growing at three times the rate of mature markets, will account for nearly half of global non-cash transaction volumes. So, expanding a nation’s wealth and enabling people to prosper cannot happen without a sophisticated and secure payments system.