Payment applications developer Ixaris is working with United Bank for Africa and Ojapay to launch a virtual card-based e-commerce system designed to make online purchasing an option for more African consumers.

The bank will use London-based Ixaris' payment server to deliver an e-commerce payment scheme that mobile operators can join to serve as many as 10 million African consumers and businesses, starting Oct. 28. Their offering will cover 20 markets in Africa.

"Most African consumers are either not transacting online by choice, or simply do not have the means to transact online," said Alex Mifsud, CEO and founder of Ixaris.

The system essentially provides a way for mobile operators to "work within the financial regulations in Nigeria and in other African countries" while benefiting from an infrastructure on which they can build mobile financial services, Mifsud said. 

UBA will issue virtual Visa and MasterCard prepaid cards generated through the Ixaris/Ojapay virtual card technology and the Ojapay aggregate service portal, which gives merchants access to the system's financial institution services and payments infrastructure.

The system should not be regarded as another mobile wallet option, Mifsud said.

"This deployment is a more generic 'core account infrastructure' offering to mobile operators in Africa," Mifsud said. "In this scenario, the virtual prepaid card acts as a virtual account holding real money under the custody of a regulated financial institution."

In the past decade, Africa has generally been viewed as a country ripe for payments innovation and mobile technology, partly because it is not held back by aging legacy systems.

MasterCard announced two months ago that it was working with Nigerian officials to deploy a national identity card with a payment capability attached as a way to broaden financial services.

Mobile payments are common in regions of Africa through the M-Pesa system, but

African markets are in need of an additional e-commerce option, Mifsud said.  

PayPal extended its service into Nigeria and surrounding Africa markets in June, but "it is still in the early days to see what kind of take-up PayPal will generate," Mifsud said.

Africa represents a long-term opportunity for Visa and MasterCard, making their presence in the new e-commerce system important for the brands because of the affiliation with United Bank for Africa, said Gil Luria, analyst with Los Angeles-based Wedbush Securities.

"A banking system is really the prerequisite for credit or debit cards anywhere else in the world, and Africa is largely unbanked," Luria said.

Visa and MasterCard have been trying for years to come up with ways to leverage their infrastructure in an unbanked environment through the telcos, Luria said. "Basically, this system means that, instead of signing up for a bank account, they can create a pseudo-bank account through a cell phone account."

Ixaris' technology establishes payment applications and value-added services to handle e-commerce purchases, e-gifting, in-game payments and micropayments, Mifsud said.

For the bank's corporate clients, the technology provides tracking of purchases and a full account of payments activities.

A consumer or business can also obtain a physical card linked to the virtual account to use at ATMs and the physical point of sale.

The virtual cards are delivered through a secure socket layer and hypertext transfer protocol session to the cardholder. "There is no need for tokenization because there is no untrusted party with the potential to play man-in-the-middle," Mifsud added.

The virtual cards can be issued and delivered instantly to any device, and are much cheaper than physical card stock, with no additional cost for card personalization, delivery and activation, Mifsud said

Consumers using the system can create a new card for a single transaction or to use repeatedly with a single merchant. "This gives them unprecedented control over their money online," Mifsud added.

Even though the system will initially operate through UBA-branded Visa and MasterCard cards, the technology also works with local card schemes. In some cases, a bank may opt to issue local cards to accept local e-commerce transactions at a lower cost, Mifsud said.

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