Imagine this: Your eCommerce business is booming. Your online store is attracting customers from around the globe, but then the headaches start. Dealing with different currencies, tax regulations, and compliance rules in every country feels like navigating a minefield blindfolded. Sound familiar?

Managing global eCommerce operations has become exponentially more complex. While your competitors are racing to capture market share across borders, you’re caught in an endless cycle of putting out compliance fires, managing payment disputes, and trying to keep up with an ever-changing maze of international regulations. The global e-commerce market is experiencing tremendous growth, with sales expected to exceed $6.8 trillion in 2025.

This is where a Merchant of Record (MoR) model comes in – not as another vendor relationship to manage, but as a strategic shift that’s helping companies like Shopify and Nike scale their global operations while dramatically reducing their risk exposure. They’ve discovered what many growing eCommerce businesses learn the hard way: trying to handle everything in-house isn’t just risky – it’s often impossible to do well.

What is a Merchant of Record (MoR)?

A Merchant of Record is a legal entity that serves as the official seller of record in a transaction. When businesses utilize an MoR service, they effectively transfer many of their commercial responsibilities and risks to this specialized provider. Think of it as having a knowledgeable business partner who handles the complex aspects of selling online while you focus on growing your business.

But why is this so important? Let’s break down the risks an MoR helps an eCommerce avoid:

Reduced PCI compliance burden

Processing payments online means dealing with sensitive customer data, and that comes with a whole lot of responsibility. PCI DSS compliance, the security standard for payment card data, can be a real headache. An MoR swoops in to take this burden off your shoulders. By handling the payment processing, they become responsible for meeting those stringent security requirements, freeing you from the worry of potential data breaches and the hefty fines that come with them.  

Global tax compliance is made easy

Ever tried to wrap your head around international tax laws? It’s a maze that can make even the most seasoned business owner dizzy. Each country has its own set of rules, and keeping up with them all is a recipe for sleepless nights. But with an MoR, you can rest easily. They become responsible for calculating, collecting, and paying those taxes in every jurisdiction you operate in. This not only ensures you’re always on the right side of the law but also minimizes the risk of facing unexpected tax bills or penalties.  

Payment processing across borders

Offering a smooth and seamless checkout experience is crucial in eCommerce. But when you’re dealing with customers worldwide, accepting payments in different currencies and through various methods can quickly become complicated. An MoR simplifies all this. They can handle multiple currencies and payment methods, making sure your customers can pay with ease, no matter where they are. This reduces the risk of failed transactions, frustrated customers, and lost sales.  

Fighting fraud on your behalf

Online fraud is a growing concern for eCommerce businesses. Chargebacks, fraudulent orders, and other shady activities can eat into your profits and damage your reputation. A good MoR has robust fraud prevention systems in place to combat this. They use sophisticated tools and techniques to identify and prevent fraudulent transactions, protecting your business and your bottom line.  

Legal and regulatory compliance

Expanding your business internationally means stepping into a world of different laws and regulations. What’s perfectly acceptable in one country might be a big no-no in another. Keeping track of all these legal nuances can be overwhelming. An MoR acts as your legal shield, ensuring you comply with local regulations in every market you enter. This minimizes the risk of legal challenges, fines, and reputational damage, allowing you to focus on growing your business.  

The MoR Advantage

The benefits of using an MoR aren’t just anecdotal. Studies have shown that businesses using MoR services experience a significant reduction in risk and an increase in efficiency. By understanding the power of a Merchant of Record, you can confidently navigate the global eCommerce landscape, minimize your risk, and unlock new growth opportunities.

 🔔 Struggling with international payments and tax compliance for your eCommerce business? Our Merchant of Record solution simplifies global expansion. Contact us today for a free consultation.

Looking to grow your business in Africa without the headaches of traditional registration? You’re not alone. Many entrepreneurs face significant challenges during the formal registration process.

This article will guide you through five practical alternatives, tackling common concerns like:

• Expensive: Many countries charge substantial fees for various stages of the registration process, including name reservation, incorporation, and obtaining necessary licenses. These fees can be a significant burden for small businesses and startups. For instance, business registration costs as high as $12,000 to $20,000 in some African countries.

• Time-consuming: Business registration in many countries is plagued by bureaucratic red tape, forcing entrepreneurs to waste valuable time and resources navigating a maze of complex procedures instead of focusing on building their businesses. The process can take as long as six months in some African countries.

• Complex: Each African country has its own unique set of laws, regulations, and procedures for business registration. These can differ significantly, making it difficult for businesses to navigate the process across multiple countries. Often, entrepreneurs need to deal with multiple government agencies, each with its own set of fees and requirements. This can lead to unexpected costs and delays.
  
  

Read also: Business Registration Requirements in Various African Countries

If these are a non-starter for you, then read on. We’ve listed five alternatives that you’ll find helpful.

Merchant of Record solution

Similar to the age-old concept of a reseller, a Merchant of Record (MoR) acts as the legal seller for online transactions, assuming responsibility for processing payments, managing refunds, and ensuring compliance with local tax and regulatory requirements. Essentially, they act as the middleman between the actual seller and the customer, handling all the financial and legal complexities of the transaction. This allows businesses to expand their reach globally without having to navigate the complexities of international sales themselves.

One of the most compelling aspects of a Merchant of Record (MoR) is its cost-effective nature. With most MoRs, there are no upfront fees; instead, a small commission is applied to each successful transaction. This allows for rapid market entry and the ability to withdraw without significant financial loss if sales don’t materialize.

If your business is looking for a reliable Merchant of Record to help with your expansion across Africa, Startbutton is a leading Merchant of Record you can use. Startbutton currently serves over 100 merchants across 25 countries in sectors like Travel and hospitality, financial services, gaming, and e-commerce. Its footprint spans 14 African countries, including Nigeria, Ghana, Tanzania, Rwanda, South Africa, and Uganda.

Unlike other MoRs, Startbutton has all the important features that you need. These features include:

• Global expansion: With a presence in 15 African countries, we help your business expand its reach globally without having to establish a physical presence in each market. 

• Payment processing and orchestration: Efficiently accept payments from customers in their local currencies and make disbursements.  

• Treasury and currency conversion: Avoid suffering loss due to currency devaluation or fluctuation. You can convert payments made in foreign currencies by international customers to another currency you choose.

• Compliance: We handle all the tax and regulatory compliance requirements, saving businesses time and money. Think: calculating, filing, and remittance of sales tax in all required locations.

• Disputes and refunds: Say goodbye to handling disputes. We help simplify complex payment processes by effectively managing payment reconciliation, ensuring accurate and timely refunds, and resolving chargebacks efficiently.

Startbutton’s effectiveness in driving revenue growth and operational efficiency in challenging markets is evident in the testimonials from our merchants.

“Startbutton has transformed our operations by boosting revenue, reducing customer queries, and streamlining Pay4Me payment collections in Ghana, Kenya, Uganda, Tanzania, and other African countries, this has increased our customer satisfaction rate and directly impacted our increased users from this region.”

– Sunday Paul Adah, CEO and Founder of Pay4Me

👋 Startbutton offers a hassle-free alternative to traditional business registration.  Our all-in-one platform provides a simple, streamlined solution for launching and managing your business, complete with essential tools, legal compliance, and expert support. Try Startbutton today.

Traditional Business Registration vs Startbutton: Feature Comparison

Representative Office

This is a less formal presence than a branch office, primarily focused on market research, promotion, and liaison activities. Representative offices are not a separate legal entity and operate as an extension of the parent company, they usually cannot engage in direct business operations or generate income locally. Large corporations across various sectors often use representative offices to test and explore new markets before making substantial investments. Companies in highly regulated sectors like pharmaceuticals, finance, and energy also often use representative offices to navigate complex regulatory environments.

Advantages of Representative Offices

• Cost-effective: Setting up and maintaining a representative office is generally less expensive than establishing a branch office or subsidiary.

• Market exploration: It provides a low-risk way to test a new market, gather information, and assess potential before making a larger investment.

• Brand building: It helps increase brand awareness and establish relationships with potential customers and partners in the new market.

• Local presence: It provides a physical point of contact for local stakeholders, enhancing credibility and trust.

• Regulatory ease: The registration process for a representative office is typically simpler and faster than for other types of entities.

Disadvantages of Representative Offices

• Limited activities: The inability to engage in commercial activities restricts revenue generation and business development opportunities.

• Funding restrictions: It typically relies on funding from the parent company and cannot generate its own revenue.

• Tax implications: While generally not subject to corporate income tax, it may be subject to other taxes and regulations, depending on the country.

• Limited growth potential: The restricted scope of activities can hinder the long-term growth and expansion of the business in the new market.

Joint Venture

A Joint Venture (JV) involves partnering with a local company to establish a new business entity. Joint ventures can provide access to local knowledge, networks, and resources while mitigating some of the risks associated with operating independently in a foreign market. This arrangement is designed to benefit all partners, leveraging their combined strengths to achieve a shared goal.

Volkswagen’s joint venture with FAW Group is a prime example of a foreign automaker entering the vast Chinese market. Due to regulations and the desire to leverage local knowledge, this partnership allowed Volkswagen to establish a strong foothold in China’s automotive industry. Starbucks partnered with Tingyi Holding Corp to expand its ready-to-drink beverage business in mainland China. Tingyi’s extensive distribution network was crucial for Starbucks to reach a wider consumer base.

Advantages of Joint Ventures

• Shared risk and cost: Partners share the financial burden and risks associated with the venture, reducing individual exposure.

• Access to new markets: JV partners can leverage each other’s existing networks and distribution channels to enter new markets more quickly and efficiently.

• Increased capacity and resources: Combining resources and expertise allows the JV to take on larger projects and pursue opportunities that might be beyond the reach of individual partners.

• Learning and innovation: Partners can learn from each other’s strengths and best practices, fostering innovation and knowledge transfer.

• Competitive advantage: A JV can create a stronger competitive position by combining the strengths and market share of the partners.

Disadvantages of Joint Ventures

• Complexity: Negotiating and structuring a JV can be complex and time-consuming, requiring careful planning and legal agreements.

• Shared control: Partners need to align on strategic decisions and operational processes, which can sometimes lead to disagreements or conflicts.

• Cultural differences: Differences in corporate culture and management styles can create challenges in collaboration.

• Limited flexibility: The JV agreement may restrict individual partners’ flexibility in making independent decisions.

• Potential for conflicts: Disagreements over strategy, investment, or profit-sharing can arise between partners.

Mergers and acquisitions (M&A)

Mergers and acquisitions (M&A) occur when two companies combine to form a single entity. This can be done through various methods like purchasing assets or shares, or by forming a completely new company. M&A is a significant step in business expansion, often employed to gain market share, access new technologies or resources, or eliminate competition.

An example of M&A at work is Walmart’s acquisition of a majority stake in Massmart, which provided them with a significant retail presence in South Africa and access to the broader African market. Uber’s acquisition of Careem allowed them to gain a strong foothold in the Middle Eastern ride-hailing market, a region where Careem had established a dominant presence.

Advantages of M&A

• Rapid growth: M&A can achieve rapid growth compared to organic expansion.

• Economies of scale: Larger scale can lead to cost savings in production, procurement, and operations.

• Increased revenue and profitability: Combining revenue streams and achieving synergies can boost financial performance.

• Enhanced market position: M&A can create a stronger competitive position and increase market power.

• Access to new markets and customers: Expanding into new geographic markets or customer segments can drive growth.

Disadvantages of M&A

• High costs: M&A transactions can be expensive, involving legal fees, due diligence costs, and potential premiums paid for the target company.

• Integration challenges: Combining different company cultures, systems, and operations can be complex and lead to conflicts or inefficiencies.

• Financial risks: Overpaying for an acquisition or failing to achieve expected synergies can lead to financial losses.

• Regulatory hurdles: M&A transactions may be subject to regulatory approvals and antitrust scrutiny.

• Loss of key employees: Uncertainty and changes in management can lead to the loss of key employees from the acquired company.

Strategic Alliance

Strategic Alliances are collaborative agreements between two or more companies to achieve specific business objectives. They can take various forms, such as technology licensing, distribution agreements, or research and development partnerships.

A popular example of this among Airlines – Star Alliance, OneWorld, SkyTeam. These alliances allow airlines to expand their global reach by offering codeshare flights, shared frequent flyer programs, and coordinated scheduling.

Advantages of Strategic Alliances

• Shared resources: Partners can share resources such as technology, expertise, distribution networks, and customer bases, leading to cost savings and increased efficiency.

• Reduced risk: By sharing risks and costs, companies can pursue more ambitious projects or enter new markets with less financial exposure.

• Increased market reach: Alliances can provide access to new markets and customer segments through the partner’s existing networks and distribution channels.

• Enhanced innovation: Collaboration can foster innovation by bringing together diverse perspectives and expertise.

• Competitive advantage: By combining strengths, companies can create a stronger competitive position in the market.

Disadvantages of Strategic Alliances

• Coordination challenges: Aligning strategies and coordinating activities between independent companies can be complex and require effective communication and trust.

• Potential for conflicts: Disagreements over strategy, investment, or profit-sharing can arise between partners.

• Limited control: Each partner retains control over its own operations, which can sometimes lead to challenges in achieving shared goals.

• Knowledge leakage: Sharing information and resources can create a risk of unintended knowledge leakage to competitors.

• Dependence on a partner: Over-reliance on a partner can create vulnerabilities if the alliance dissolves or the partner’s performance declines.

While various alternatives to formal business registration exist, each with its own merits, the Merchant of Record (MoR) model stands out as a compelling option for businesses aiming for rapid, global expansion, especially in the digital realm.

Many alternatives, such as representative offices, joint ventures, strategic alliances, and even mergers and acquisitions, require significant upfront investment, complex legal structures, and ongoing management commitments. These options may not be suitable for businesses seeking agility and scalability, especially in the initial stages of market entry.

The MoR model, in contrast, offers a streamlined and cost-effective approach. By taking on the complexities of payment processing, tax compliance, and legal responsibilities, an MoR allows businesses to focus on their core competencies and rapidly expand their global reach. This is achieved with minimal upfront costs, often operating on a commission-based model.

Selling your products and services internationally helps companies reach new customers in new markets and discover untapped revenue streams. But it comes with the challenge of business registration, and navigating international tax compliance, including VAT, customs duties, and fraud prevention.

Managing all these requirements across multiple can be challenging for most businesses, even when the apparent benefits of cross-border commerce justify the efforts.

One of the major ways businesses have handled this is to partner with a merchant of record (MoR) to ease the burden of legal and financial complexities.

What is a Merchant of Record (MOR)?

A Merchant of Record (MOR) is a company that acts as the legal seller for online transactions, assuming responsibility for processing payments, managing refunds, and ensuring compliance with local tax and regulatory requirements. Essentially, they act as the middleman between the actual seller and the customer, handling all the financial and legal complexities of the transaction. This allows businesses to expand their reach globally without having to navigate the complexities of international sales themselves.

What are the responsibilities of a Merchant of Record?

• Payment Processing: MORs handle all aspects of payment processing, including accepting payments from customers, processing refunds, and managing chargebacks. They ensure that payments are processed securely and efficiently.

• Tax Compliance: MORs are responsible for calculating, collecting, and remitting sales taxes to the appropriate authorities. They ensure that businesses comply with local tax laws and regulations, avoiding penalties and legal issues.

• Regulatory Compliance: MORs ensure that businesses comply with all relevant regulations and laws, including consumer protection laws, data privacy laws, and anti-money laundering regulations.

• Risk Management: MORs assume the financial and legal risks associated with online sales, such as chargebacks and fraud. They have systems in place to detect and prevent fraudulent activity.

• Customer Support: MORs often handle customer inquiries and complaints related to payments and refunds. They provide a level of customer support that can help businesses maintain a positive reputation.

How does partnering with an MoR benefit your business?

• Reduced Risk: By assuming the financial and legal risks of online sales, the MoR allows businesses to focus on their core operations without worrying about the complexities of international sales.

• Simplified Compliance: The MoR handles all the tax and regulatory compliance requirements, saving businesses time and money. Think: calculating, filing, and remittance of sales tax in all required locations.

• Global Expansion: The MoR enables businesses to expand their reach globally without having to establish a physical presence in each market. This process can take up to 6 months costing as high as $10,000.

• Payment processing: ​​By integrating with an MoR, you minimize payment declines and maximize transaction success rates by utilizing a sophisticated payment orchestration strategy that intelligently routes transactions across multiple providers. This approach reduces the risk of legitimate payments being mistakenly flagged as fraudulent.

• Currency conversion: MoR often provides a system to handle the conversion of payments made in foreign currencies by international customers.

• Disputes and refunds: Say goodbye to handling disputes. MoR helps with simplifying complex payment processes by effectively managing payment reconciliation, ensuring accurate and timely refunds, and resolving chargebacks efficiently.

What types of businesses benefit from an MoR?

Many types of businesses can benefit from using a Merchant of Record (MoR), but here are some that typically experience the greatest advantages:

1. E-commerce businesses expanding internationally

• Challenge: Navigating international tax laws, payment processing, and compliance can be a major hurdle for online businesses selling globally.

• How an MoR helps: An MoR handles these complexities, enabling smooth cross-border transactions, managing local regulations, and minimizing risk.

2. SaaS and digital subscription services

• Challenge: Recurring billing, managing international taxes on digital goods, and handling varying local regulations can be complex.

• How an MoR helps: An MoR streamlines recurring billing, ensures accurate tax calculation and remittance and simplifies compliance with local laws.

3. Online marketplaces and platforms

• Challenge: Onboarding international sellers, managing diverse payment methods, and ensuring compliance for a large network of vendors can be overwhelming.

• How an MoR helps: An MoR can handle seller onboarding, payment processing, and tax compliance, reducing the administrative burden for the platform.

4. Businesses with high-risk transactions

• Challenge: Certain industries or transaction types may be considered high-risk by payment processors, leading to higher fees or account termination.

• How an MoR helps: An MoR can often provide access to payment processing for high-risk businesses by assuming some of the risks themselves.

5. Companies without local entities

• Challenge: Expanding into new countries without establishing a local legal entity can be challenging due to regulatory and tax requirements.

• How an MoR helps: An MoR acts as the local entity, enabling businesses to operate in new markets without the complexities of setting up a subsidiary.

6. Small businesses with limited resources

• Challenge: Small businesses may lack the resources and expertise to manage international payments, taxes, and compliance effectively.

• How an MoR helps: An MoR provides a cost-effective solution by handling these complexities, allowing small businesses to focus on growth.

How can you choose the right Merchant of Record?

• Reputation: Choose a MoR with a good reputation in the industry and positive reviews from other businesses. Startbutton is an example of a reputable MoR.

• Experience: Look for a MoR with experience working with businesses in your industry and in your target markets.

• Fees: Compare the fees charged by different MoRs and choose one that offers competitive rates.

• Services: Make sure the MoR offers the services you need, such as payment processing, tax compliance, and regulatory compliance.

• Technology: Choose a MoR with a robust technology platform that can integrate with your existing systems.

• Customer Support: Make sure the MoR provides excellent customer support in case you have any questions or issues.

What are the popular providers of merchant of record services?

• Startbutton

Startbutton is a leading Merchant of Record service that helps multi-national businesses get paid in African countries in a compliant and tax-efficient manner, without the need to set up local offices.

Startbutton currently serves over 100 merchants across 25 countries in sectors like Travel and hospitality, financial services, gaming, and e-commerce. Its footprint spans 14 African countries, including Nigeria, Ghana, Tanzania, Rwanda, South Africa, and Uganda.

🔔 Struggling with international payments and tax compliance for your digital products? Our Merchant of Record solution simplifies global expansion. Contact us today for a free consultation.

• Adyen: Adyen’s MOR service provides a comprehensive solution for businesses expanding globally. They handle payment processing, ensure compliance with local tax laws and regulations, and manage risk, freeing you to focus on what you do best.

• DLocal: DLocal is a payment platform that specializes in emerging markets. They offer a Merchant of Record (MOR) service as part of their broader suite of solutions, and it’s particularly attractive to businesses looking to expand into Latin America, Africa, and Asia.

Merchant of record summary

A MOR can be a valuable partner for businesses that want to expand their online sales globally. By outsourcing the financial and legal complexities of international sales to a MOR, businesses can reduce their risk, simplify compliance, and focus on their core operations. When choosing a MOR, it is important to consider factors such as reputation, experience, fees, services, technology, and customer support.

FAQ on merchant of record

How does an MoR work?

When you use an MoR, they become the legal seller of your product or service in the target market. This means they:

• Process payments from customers in the local currency.

• Handle tax calculations and remittances.

• Ensure compliance with local laws and regulations.

• Assume liability for chargebacks and refunds.

What’s the difference between a merchant of record and a payment service provider (PSP)

While both Merchants of Record (MoRs) and Payment Service Providers (PSPs) play a role in facilitating online transactions, they differ significantly in scope and responsibility. Think of a PSP like a bridge that simply allows money to cross from the buyer’s bank account to the seller’s. A well-known example is Stripe.  They handle the technical aspects of the transaction but don’t get involved in the broader legal and financial implications.

An MoR, on the other hand, acts as the official seller of your product or service in a foreign market. They take on the complexities of local regulations, tax compliance, and even liability for issues like chargebacks and refunds. This is a much broader role than a PSP, making MoRs essential for businesses expanding internationally, especially those without local entities.

Essentially, a PSP handles the “how” of getting paid, while an MoR handles the “where” and “what next.” This includes navigating the maze of international laws, taxes, and compliance that can be a major headache for businesses going global.

By taking on these responsibilities, MoRs allow businesses to focus on their core strengths – developing products, marketing, and serving customers – without getting bogged down in the complexities of international commerce.

Do I still need a payment service provider (PSP) if I use an MoR?

An MoR often includes payment processing as part of its services, so you may not need a separate PSP. However, some businesses may choose to use both an MoR and a PSP depending on their specific needs and payment infrastructure.

What’s the difference between a merchant of record (MoR) and a seller of record (SoR)?

The MoR is your financial expert, ensuring smooth and compliant payment processing, navigating international tax laws, and assuming liability for financial risks. They’re like the cashier at the checkout, making sure the money flows correctly and all the rules are followed.

The SoR, on the other hand, is your logistics and customer service guru. They handle everything related to getting your product into the customer’s hands – from shipping and delivery to handling returns and answering customer inquiries. Think of them as the store manager, ensuring a smooth and satisfactory customer experience.

While some companies wear both hats, many choose to partner with specialists for each role, especially when venturing into new territories. This allows them to leverage expertise and navigate the complexities of international e-commerce more effectively.

Can a business expand into a new country without going through the necessary legal registrations?

This is a critical question frequently pondered by CEOs and executives seeking to expand their businesses internationally because traditional business expansion methods are filled with numerous bureaucratic hurdles and delays.

As a seasoned startup lawyer and entrepreneur with a decade of experience, I’ve asked this question many times as I’ve seen the difficulties of business expansion. In my experience, leading compliance at Paystack (a pan-African payment company acquired by Stripe), there were instances where we had to turn away businesses seeking payment integration due to business registration hurdles. This was frustrating but necessary to maintain compliance. 

I moved on to co-found RegCompass, a regulatory compliance outfit that supported leading African tech companies, including unicorns like Flutterwave and Chipper Cash. This experience gave me a deeper understanding of the challenges faced by companies, from daily operational hurdles to navigating complex fundraising rounds and merger and acquisition transactions.

While at RegCompass, I found a solution to the hurdle of legal registration and regulatory compliance in new markets. 

We created startbutton, a Merchant of Record platform that dramatically accelerates market expansion, reducing the registration time from months to a mere 24 hours. We’ve since then further enhanced our solution with treasury management and compliance capabilities, creating a comprehensive suite of solutions that empowers businesses to focus on growth.

In this post, I’ll share:

• Why every company doesn’t need to register in a new market; and

• How companies can avoid this trap with a more sustainable, scalable solution.

Why the current way business expansion in Africa is done is broken

Business expansion in Africa is a long and arduous process. Here’s why: Africa is a continent of remarkable diversity. With 54 countries, it boasts the highest number of nations among all continents. Now that’s 54 different countries with over 1,000 languages spoken and a wide range of cultural norms and traditions. But business expansion is most significantly affected by the diversity of payment systems and regulations.

Fragmented payment landscape

The African payment landscape is characterised by a different mix of traditional and modern methods, with cash remaining a dominant mode of exchange.  This is due to various factors, including limited access to bank accounts, particularly in rural areas, and the preference for cash in informal sectors. Notably, 70% of transactions in Egypt and Morocco are paid via cash. 

Given the widespread use of cash across Africa, offline channels, particularly agent networks, play a vital role in the continent’s e-payment ecosystem. Prominent examples include SANEF in Nigeria, Mukuru in Southern Africa, and Fawry in Egypt, all boasting agent networks with over 100,000 access points, demonstrating the significant reach and impact of these non-telecom players.

Mobile money services are more prominent in other parts of Africa, providing financial inclusion to millions of previously unbanked individuals. Popular platforms like M-Pesa, MoMo, and Orange Money allow users to send, receive, and store money using their mobile phones. While highly popular in countries like Ghana and Kenya, their penetration in Nigeria and South Africa, despite significant growth, remains relatively lower.

Digital payment platforms are gaining traction, especially in urban areas and among younger demographics. These platforms enable online transactions, mobile payments, and point-of-sale (POS) transactions. In Nigeria, bank transfers remain a dominant method, favoured for their perceived ease and speed. Conversely, debit cards enjoy higher usage in South Africa, reflecting distinct consumer behaviours and market dynamics.

The prevalence of different payment methods across different markets necessitates businesses to offer a variety of payment options to ensure seamless transactions. Neglecting customer preferences in this regard can lead to significant consequences, including abandoned sales and increased customer churn.

Heterogeneous business regulations 

The time required to register a business across Africa varies significantly, ranging from a matter of weeks in some countries to several months in others. This disparity highlights the diverse regulatory environments and administrative procedures found throughout the continent.

Countries exhibit significant variations in their tax structures, directly impacting business profitability. For instance, Côte d’Ivoire levies a Value Added Tax (VAT) of 18% and a Company Income Tax (CIT) of 25%, whereas Kenya imposes a 16% VAT and a 30% CIT.  Many African countries are rolling out more than ever Digital Service Taxes (DST) to capture tax from non-resident tech companies. Nigeria stands out with a substantial 6% DST, while Kenya’s 1.5% rate aligns more closely with the global average range of 2-7%. Tanzania’s moderate 2% DST and Côte d’Ivoire’s 3% levy further illustrate the diversity in this emerging tax domain.

Other disparities include appointing foreign directors in African countries which can present unique challenges as requirements vary significantly, with some jurisdictions mandating residence permits for foreign directors. In some countries, business registration can be done via electronic registration systems, while others necessitate physical presence for certain procedures. Furthermore, local shareholder requirements are common in some African nations like Ghana.

Navigating property registration processes can be a significant obstacle for businesses, often characterized by complexity and lengthy timelines. These delays can hinder crucial business activities such as securing loans or leasing property. Some markets require as long as six months to set up with costs as high as $12,000 to $20,000.

For companies involved in the trade of physical goods, the challenges are compounded by complex customs procedures, high tariffs, and non-tariff barriers, all of which significantly increase the cost of doing business.

Even after achieving initial compliance, businesses must remain vigilant in monitoring the ever-evolving regulatory landscape. A single regulatory shift can swiftly transform a compliant entity into a non-compliant one, potentially resulting in significant sanctions and operational disruptions.

How we started Startbutton

With the traditional system broken beyond our repair, we came up with two questions:

• Why do businesses expand to new markets?

• What solution can solve this that’s not easily replicable by other lawyers?

In addressing the initial question, we identified a core motivation for companies to expand internationally: to increase sales and access new revenue streams. Consequently, our focus shifted to identifying effective methods for companies to test and validate market opportunities in these new territories.

Our competitive analysis revealed that business registration services were widely offered by most legal practitioners. This led us to focus less on this service offering. Instead, our objective was to develop a unique and differentiated solution that effectively addressed the immediate challenges faced by businesses entering new markets – a solution that would be difficult for competitors to easily replicate.

By synthesizing these insights, we came up with a Merchant of Record (MoR) solution. This service empowers businesses to accept payments in local currencies and ensure regulatory compliance within target markets without the need for establishing local entities. While the MoR concept has been established in the market, with prominent players like Gumroad, Paddle, and DLocal, we believed there was an opportunity to differentiate our offering and capture a significant market share in Africa.

Startbutton currently serves over 100 merchants across 25 countries in sectors like Travel and hospitality, financial services, gaming, and e-commerce. Its footprint spans 14 African countries, including Nigeria, Ghana, Tanzania, Rwanda, South Africa, and Uganda.

What’s different about the MoR approach?

No need for registration 

We have successfully registered businesses in 14 African markets and counting, obtaining all necessary licenses to ensure legal operation. As your trusted third-party representative, we act on your behalf, navigating the complexities of local regulations so you can focus on business growth.

Beyond initial registration, we proactively monitor regulatory changes, ensuring ongoing compliance and mitigating the risk of costly non-compliance penalties.

Integration with payment partners

Securing a bank account for a newly registered business in Africa can be a lengthy and frustrating process, often taking months due to stringent bank requirements. With MoR, this obstacle is eliminated. We seamlessly provide you with a dedicated bank account and access to a diverse range of payment methods from day one.

Furthermore, our strategic partnerships with multiple payment providers ensure business continuity. If one payment gateway experiences disruptions, our redundant integrations seamlessly switch to alternative channels, minimizing service interruptions and maximizing your operational efficiency. This collaboration connects our merchants to over 400 million wallets and bank accounts across 5 major African currencies in Sub-saharan Africa.

Currency Conversion

Currency fluctuations can significantly impact profit margins and erode the value of your hard-earned revenue. To mitigate this risk, it’s crucial to swiftly convert local currencies into a stable currency like the US dollar.

We understand the complexities of navigating currency exchange markets. That’s why we’ve integrated seamless currency conversion directly into our platform. This eliminates the time-consuming and potentially disadvantageous process of manually sourcing buyers for your local currency, ensuring you secure favourable exchange rates and maintain control over your financial outcomes.

Try Startbutton today

With Startbutton you get all this and more, as we’re constantly adding new features and expanding to more markets. If you’re curious and want to learn more, register and book a demo here to talk to our reps to learn how Startbutton can with your business expansion needs.

Have you ever wondered how much tax people and companies pay in different African countries? With African countries leaning more toward taxation to bump up revenue generation, taxation policies on digital services and corporate operations in Africa are changing rapidly. Notably, while the tax burden in some African countries has increased significantly, others have experienced a relative decline.

Here’s a breakdown of the various tax burden in African countries—Nigeria, Ghana, Kenya, South Africa, Rwanda, Uganda, Tanzania, and Côte d’Ivoire—and how it compares to global standards.

Tax Breakdown by Countries

Breakdown for different tax rates in different African countries

Digital Service Taxes (DST)

Many African countries are rolling out more than ever Digital Service Taxes (DST) to capture tax from non-resident tech companies.

• Nigeria charges a 6% DST, one of the highest in the world.

• In Kenya, the rate is 1.5%, which is more aligned with the global range of 2-7%.

• Tanzania has a moderate 2% DST, while Côte d’Ivoire charges 3% .

By contrast, countries like Uganda have rejected DST proposals altogether.

Value Added Tax (VAT)

Value Added Tax is charged on most goods and services in Africa, including digital services in some cases.

• Nigeria‘s VAT rate modest 7.5%, which is low compared to the African norm .

• South Africa and Ghana levy a 15% VAT, while Rwanda, Uganda, Tanzania, and Côte d’Ivoire charge 18% .

Globally, VAT rates vary between 17-25%, making Africa’s rates generally moderate.

Withholding Tax (WHT)

Withholding Taxes (WHT) apply to payments made to non-residents, and they are crucial for businesses working with foreign entities.

• Kenya has the lowest withholding tax at 5%, while South Africa and Côte d’Ivoire impose 20%​
  ​

• Nigeria‘s 5-10% WHT is middle-ground depending on the transaction, while other countries in the region tend to impose higher rates​

Corporate Income Tax (CIT)

Corporate income taxes (CIT) significantly impact business operations across Africa.

• Nigeria, Kenya, Rwanda, Uganda, and Tanzania charge a 30%, which is considered high compared to the global average of 23-25%.

• Ghana (25%) and Côte d’Ivoire (25%) offer slightly lower rates.

Are Africans Paying More Taxes?

In general, African countries impose taxes at rates comparable to global averages but these can feel disproportionately high when accounting for the region’s lower purchasing power. For instance:

• DST rates are generally moderate, though Nigeria’s 6% stands out as relatively high.

• VAT rates of 15-18% are aligned with global norms but impact consumers more in regions where incomes are lower.

• WHT and CIT are on the higher end, especially when compared to countries like the U.S., which imposes a 21% corporate tax .

Although tax rates in Africa align with global standards, the lower income levels in many African countries exacerbate the financial burden on both businesses and individuals.

For example, while VAT rates of 15-18% are common globally, Africans—whose income levels are often significantly lower—end up spending a larger proportion of their income on taxes. Similarly, corporate income tax rates of 30% can be burdensome for businesses operating in environments with fewer economic incentives and less infrastructure compared to more advanced markets.

Automating tax compliance across African countries

Navigating these complex tax regimes can be a challenge for businesses, particularly those looking to expand across Africa. Startbutton helps businesses streamline their operations by handling tax compliance and regulatory requirements in the markets they enter. Whether managing digital service taxes, VAT, or corporate income tax, Startbutton automatically ensures that businesses remain compliant, allowing them to focus on growth while avoiding costly penalties and administrative hurdles.
Visit www.startbutton.africa to get started of send an email to hello@startbutton.africa to get started.

Welcome to the world of fintech in Africa, where cross-border payments meet real-world financial challenges—and by challenges, I mean the never-ending riddle of friendly fraud and chargebacks that comes with business expansion in Africa. It’s the fintech version of trying to catch smoke with your bare hands.

If you’re not careful, you will find your profits slip through your fingers faster than you can say “unauthorized transaction.” But don’t worry, with the right approach, managing friendly fraud and chargebacks doesn’t have to be a nightmare—it can just feel like a particularly tricky game of chess. 

So, let’s get started and approach this problem with a dash of strategy.

Friendly Fraud and Chargebacks: The Frenemies You Didn’t Ask For

Imagine this: you’ve just facilitated a smooth, legitimate transaction for a customer. Everyone’s happy, right? Then, out of nowhere, that same customer says, “I never made that purchase!” and initiates a chargeback. Welcome to the not-so-delightful world of friendly fraud—when customers dispute legitimate transactions for various reasons, from forgetfulness to downright trying to get value for a product or service for free. 

The whole idea behind friendly fraud is that a customer makes a legitimate purchase but later disputes the charge with their bank, claiming it was unauthorized or that they never received the product or service. For businesses handling cross-border payments, this issue is particularly common

This results in chargebacks; where your payment processor reverses the funds from your account and refunds the customer. Not only do you lose the transaction amount, but you also give value for funds you didn’t receive and aget slapped with fees. Oh, and if it happens too often, your processor might just start treating you like a problem child by raising your rates or even terminating your account. Yikes.

Why Is This Happening?

The Nigerian fintech space is booming, but with rapid growth and business expansion comes the growing pains of disputes, fraud and chargebacks. Here’s why fintech startups face an uphill battle:

1. Your Wallet is smarter than your fraud detection system: Many fintech startups can’t afford top-tier fraud detection tools at the beginning, making it easier for fraudsters to slip through the cracks. Or in this case, let’s say your system can’t tell the difference between a genuine dispute and someone just being ‘forgetful.’

2. Consumers are still learning the ropes: The adoption of cross-border payments is growing in Africa but a significant amount of customers across Africa are new to digital payments, which means they might not recognize a legit transaction on their statement and panic. “What’s this charge? It must be wrong!” And boom—another friendly fraud case due to a knowledge gap.

3. Regulations can be tricky: Navigating Africa’s regulatory environment can be like playing chess while blindfolded. There’s a lot to figure out, and payment businesses can’t afford to miss a move. The regulations that guide business compliance in Africa require extensive knowledge and experience to navigate.

Did you know? Startbutton helps you stay compliant across over 10 African markets at the same time.

4. Dispute resolution moves at snail speed: In startups, resolving disputes can feel like trying to put out a fire with a teaspoon of water. Long delays lead to frustrated customers initiating chargebacks rather than waiting to resolve disputes.

How to survive friendly fraud and chargebacks

Managing fraud and chargebacks can be like playing a game where the rules keep changing. But hey, you can still win if you know the right moves. Here’s how:

1. Upgrade your fraud detection—Your wallet will thank you
   Sure, fraud detection systems can be expensive, but so is losing your revenue to constant chargebacks. Investing in machine learning-driven tools that flag suspicious activity before it turns into a problem is like having an extra set of eyes on every transaction. And who doesn’t want that?

2. Make them prove they’re Legit—Because, why not?
   Time to put two-factor authentication (2FA) and biometric verifications to work. These are the digital equivalent of checking ID at the door. Two-factor authentication (2FA) significantly reduces the risk of fraud in Africa. For example, multi-factor authentication, including 2FA, can reduce fraud attempts by up to 23% during onboarding and KYC processes.

3. If customers are legit, they’ll appreciate the extra security. If they’re up to no good, you’ll catch them before they can cry “I didn’t make that purchase!”

4. Speak loud and clear—Communication can save you a ton of money

No one likes surprises on their bank statement. So, make sure your customers can recognize your merchant’s name and transaction details easily. Send real-time notifications after every purchase. “Congrats! You just bought something awesome” goes a long way in reducing disputes later.

4. Teach them the chargeback game

Customers should know that chargebacks aren’t a get-out-of-jail-free card. Take a little time to educate them on the process. A clear refund policy and a friendly reminder to contact your support team first can save everyone the hassle.

5. Data is your best friend—Track Everything

Keep an eye on dispute patterns. Are there specific customers or products that seem to trigger more chargebacks than others? Analyze your chargeback data carefully. Then, adjust your policies, improve descriptions, or tighten security where needed. You’d be amazed what a little tweaking can do.

6. Team up with your payment processor

Think of your payment processor as a teammate, not just someone who charges you fees. Work with them to understand fraud trends and how to reduce chargebacks. They’ve seen it all before and can give you valuable advice—plus, they want to keep you in business just as much as you do.

7. Fight back when it’s not your Fault

Chargeback representation may sound like a fancy legal term, but it’s basically you saying, “Hey, I’ve got proof this transaction was legit!” Collect the necessary evidence (like delivery confirmations or receipts) and challenge those invalid disputes.

Embrace the madness (and win)
Managing friendly fraud and chargebacks is a regular part of doing business; it. But don’t panic—with the right tools and strategies, your fintech startup can navigate the fraud waters with finesse.

By focusing on fraud detection, clear communication, educating your customers, and working closely with your payment processor, you can keep chargebacks to a minimum and protect your profits. And remember, every fintech startup faces these challenges—it’s how you handle them that will set you apart. So, take a deep breath, crack a smile, and manage that friendly fraud like the fintech superhero you are.

Let Startbutton Handle the Fraud Frenzy—So You Can Focus on Growing!

In a world where chargebacks and friendly fraud can disrupt business operations, having a partner that simplifies the shenanigans is a game-changer.

Startbutton is THAT partner you need. With Startbutton your business can expand into Africa without ever having to worry about managing chargebacks and staying compliant with local regulations. Our advanced fraud detection tools, dispute resolution system, and tailored compliance expertise across African markets ensure that you can focus on growing your business without losing sleep over fraud. With Startbutton, you can confidently expand across borders, knowing that your security and dispute management are in trusted hands.

Ready to get started? Visit www.startbutton.africa or hello@startbutton.africa to get started.

Imagine this: after two years of remarkable success in one market, you decide it’s time to venture into new African markets. However, one of the most significant challenges you’ll face is cross-border payments. There are too many regulatory hurdles and exorbitant fees keep severely eating into your margins, making expansion more difficult.

This scenario reflects the reality for many B2B companies and services struggling to scale through traditional banking solutions. A recent report by fintech company Duplo, released in August, highlights the continued reliance on conventional banking methods—such as cash and bank transfers—for cross-border B2B payments, particularly in West and East Africa. This dominance persists despite the many drawbacks of these methods.

Some of these drawbacks include:

• High Costs: Traditional banking methods, especially for international transactions, come with significant fees that hinder the growth of B2B businesses. These fees include transfer fees, exchange rate markups, and third-party charges, often reaching as high as 25%. For instance, in cross-border payments, the combination of SWIFT transfer costs, currency conversion markups, and other hidden fees can make traditional banking options significantly more expensive compared to specialized fintech alternatives like Startbutton. This can be particularly limiting for businesses looking to expand internationally, as high transaction costs reduce their profitability and competitive edge​.

• Slow Transaction Times: Bank transfers can take anywhere from 1 to 10 business days to process, causing delays in payments and cash flow issues. In a fast-paced B2B environment, such delays can translate to missed opportunities, cashflow disruptions and dissatisfied partners.
  This delay is often caused by the intricate steps involved in clearing and settling payments. Transactions are processed in batches, leading to delays when they occur near weekends or holidays, and the process may be further slowed by fraud checks and bank cut-off times.

• Regulatory Challenges: Regulatory challenges are a significant barrier to smooth cross-border payments, as countries have varying regulations on issues like anti-money laundering (AML), data sharing, and licensing requirements. For traditional banks, navigating these complex regulations can lead to delays, compliance risks, and legal complications, which slow down payments and increase costs. This regulatory fragmentation complicates compliance efforts and slows down expansion time.

Did You Know?
Startbutton as a Merchant of Record provides a streamlined solution to these regulatory challenges by handling compliance across multiple markets, allowing businesses to expand faster and more efficiently. This can save your business time and prevent costly delays due to regulatory issues. Click here to learn more.

• Unstable FX Rates: Fluctuating foreign exchange rates add another layer of complexity to cross-border payments. B2Bs can face significant losses if exchange rates shift during transaction processing. Traditional banks fail to provide lock-in mechanisms, leaving businesses exposed to unfavourable rates. This volatility can impact pricing, profit margins, and financial planning, making it harder for businesses to manage cash flows effectively across borders.

Are MORs the Alternative To Traditional Banking?

Merchants of Record (MoRs) like Startbutton offer a more comprehensive and robust solution to the challenges B2Bs undergo with traditional institutions. Here are some benefits to using such Fintech alternatives over traditional banks 

• APIs enable real-time FX rates
  As cross-border and multi-currency transactions continue to rise, treasury departments are under pressure to adopt digital tools that enhance their currency management workflows without causing disruption. This is where APIs (Application Programming Interfaces) come in.

Did You Know? Startbutton simplifies cross-border payments using a single API integration to handle all your payment needs across multiple markets.

APIs seamlessly integrate into existing treasury infrastructures, granting treasurers real-time access to foreign exchange (FX) rates. This capability enables better management of currency exposure, reduces risk across global accounts, and accelerates reconciliation.

By using APIs, you can also lock in FX rates for specific periods, giving you the flexibility to price goods in the client’s preferred currency while still managing funds efficiently on the backend. Additionally, APIs provide enhanced transparency for both senders and beneficiaries, allowing visibility into FX rates and the real-time status of payments. This transparency leads to more predictable cash movements and better cash management.

• Cost-Effective Solutions: Startbutton offers low-cost payment alternatives that significantly reduce the financial burden on B2B businesses. By leveraging technology to streamline processes, Startbutton minimizes transaction fees, making cross-border trade more accessible for SMEs.

• Fast Transactions: With a focus on efficiency, Startbutton ensures that transactions and collections are processed quickly, often within days. This rapid turnaround allows businesses to maintain smooth operations and seize opportunities without unnecessary delays.

• Navigating Regulations: Fintech alternatives like Startbutton, who offer compliance services, empower businesses to conduct smoother transactions and mitigate legal risks, allowing them to focus on growth and innovation. With in-depth regulatory knowledge that simplifies processes, and reduces administrative burdens, Startbutton helps B2B businesses avoid costly penalties and ensure they can operate confidently in new markets.
  With Startbutton as your compliance partner, you can save valuable time and prevent delays that often stem from regulatory issues. 

The landscape of cross-border B2B payments in Africa is ripe for transformation. While traditional banking methods continue to dominate, their inherent challenges present significant obstacles for businesses looking to expand. Startbutton exists to solve these issues and empower B2B companies thrive in the competitive global marketplace.

Ready to expand your B2B operations across Africa? Visit our website at www.startbutton.co to get started or send us an email at hello@startbutton.africa. Let’s take your business to the next level together!

In a move to enhance oversight, security, and compliance in Nigeria’s payment ecosystem, the Central Bank of Nigeria (CBN) released a directive on September 11, 2024. The policy mandates that all Point of Sale (PoS) transactions in Nigeria must be routed through Payment Terminal Service Aggregators (PTSAs), which are licensed by the CBN. This significant development is aimed at improving transparency and monitoring electronic payments, minimising fraud, and strengthening Nigeria’s financial system.

What Are Payment Terminal Service Aggregators (PTSAs)?

Payment Terminal Service Aggregators (PTSAs) act as intermediaries in the financial system, responsible for processing PoS transactions from various merchants, agents, and businesses. Initially, the Nigeria Interbank Settlement System Plc (NIBSS) was the sole PTSA licensed by the CBN in 2011. However, to reduce the risks associated with having a single aggregator process all PoS transactions, the CBN licensed Unified Payment Services Limited as the second PTSA in April 2024. This addition decentralizes the PoS transaction network, increasing market competition and improving system resilience.

Key Requirements Under the New Directive

The new policy requires the following:

• Mandatory PTSA Routing: All PoS transactions must be processed through one of the two licensed PTSAs—NIBSS or Unified Payment Services Limited.

• Integration for Payment Processors: Payment processors must integrate with both licensed PTSAs to ensure that financial institutions, known as acquirers, can select their preferred service provider.

• Reporting Requirements: Payment Terminal Service Providers (PTSPs) and payment processors are obligated to submit monthly reports to the CBN. These reports must include transaction volumes, routing specifics, and any operational issues encountered.

Importance of the Directive

The CBN’s directive forms part of a larger strategy to bolster the security, efficiency, and transparency of electronic payments across Nigeria. The new rules are expected to:

• Enhance Monitoring and Oversight: By centralizing transaction reporting through licensed PTSAs, the CBN gains better visibility into the market, allowing for more effective oversight.

• Strengthen Fraud Prevention: More stringent monitoring will help reduce incidences of fraud and cybercrime within the PoS payment ecosystem.

• Improve Compliance: With enhanced tracking of transactions, the CBN can ensure that payment processors and acquirers meet regulatory requirements, helping to prevent money laundering and other financial crimes.

Compliance Obligations for Payment Terminal Service Providers (PTSPs)

Under the new regulations, PTSPs—who manage PoS terminals—must adhere to specific compliance measures. This includes:

• Integration with Licensed PTSAs: PTSPs must ensure their PoS terminals are configured to work seamlessly with the two licensed PTSAs, facilitating smooth transaction processing.

• Monthly Reporting to the CBN: PTSPs are required to submit detailed monthly reports to the CBN, providing transparency into the number of transactions processed and any system issues. This increased reporting frequency will enhance regulatory oversight.

Compliance Challenges for Fintechs and Payment Processors

Fintech companies, particularly those offering payment services, will need to adjust to these changes swiftly. Here are some compliance implications:

1. Data Reporting and Transparency

   • Fintechs must ensure that their payment systems are capable of capturing and accurately reporting PoS transaction data. This could involve upgrading existing infrastructure or implementing new data management tools to meet the reporting requirements.

   • Failure to comply with these reporting standards could result in penalties from the CBN, putting fintechs at financial and reputational risk.

2. Implications for Third-Party Partnerships

   • Many fintechs partner with PTSPs to offer PoS services to their merchants. These partnerships now come with added responsibilities, as fintechs must ensure that their partners comply with the new regulations.

   • Third-Party Risk Management: Fintechs should perform due diligence checks on their PTSP partners to ensure their systems are fully compliant with CBN mandates. This may include verifying technical configurations of PoS devices and ensuring that they are compatible with the licensed PTSAs.

   • Contractual Adjustments: Fintechs may need to renegotiate contracts with their PTSP partners to clearly outline the new compliance obligations and reporting requirements.

Regulatory Scrutiny and Penalties

The CBN has given operators a 30-day deadline to align their systems with the new regulations. Payment processors, PTSPs, and fintechs must register their systems with the Corporate Affairs Commission (CAC) within this period. Failure to meet this timeline can result in fines, operational restrictions, and potential reputational damage.

• Non-Compliance Risks:

  • Financial Penalties: Companies that do not comply with the new directive may face hefty fines from the CBN.

  • Reputational Impact: For fintechs that rely on trust in handling sensitive financial transactions, any publicized non-compliance could harm their reputation and erode customer trust.

Cybersecurity and Fraud Mitigation Measures

As part of its efforts to mitigate fraud in electronic payments, the CBN expects fintechs and payment processors to enhance their cybersecurity protocols, including:

• Multi-Factor Authentication (MFA): Strengthening authentication methods for PoS transactions will help reduce fraud.

• Encryption: PoS data must be encrypted to prevent interception by fraudsters, protecting sensitive customer information.

• Penetration Testing: Regular security testing of payment systems will ensure that they remain resilient to cyber-attacks.

• Anti-Money Laundering (AML) Compliance: Fintechs must adopt more stringent anti-money laundering measures, including enhanced know-your-customer (KYC) processes, to prevent illicit financial activity.

The CBN’s new directive on PoS transaction routing and PTSA licensing marks a significant shift in Nigeria’s electronic payment landscape. For fintechs, payment processors, and PTSPs, these changes introduce new compliance responsibilities but also offer opportunities for greater transparency and security. By integrating with licensed PTSAs and adopting the required reporting measures, fintechs can align with CBN’s vision of a safer, more robust financial system.

Fintechs and payment processors must act to ensure compliance with these new regulations to avoid penalties and maintain customer trust in an increasingly regulated market

Don’t let compliance challenges slow you down—partner with Startbutton and ensure your systems meet all regulatory requirements while staying focused on scaling your business.

Contact Us today at hello@startbutton.africa or visit www.startbutton.africa to get started today!

Any business that has tried to sell across the African continent has had to deal with navigating complex logistics, regulatory hurdles, and fragmented payment systems. Here’s how it typically goes.

Say a Nigerian company wants to expand to Kenya, they have to consider a lot of things: registering a local entity, opening a local bank account, set up a payment system that allows them to receive payments in the local currency (Shillings) and convert it to Nigerian currency (Naira).

After all of this is done, the company has to ensure that it’s tax compliant – regularly filing necessary taxes. Supposing sales start picking up and the company decides to hire a Kenyan employee, it ideally has to pay the employee in Shillings and also pay necessary employee tax requirements. 

If they manage to do all these, they still have to keep an eye out for changes in regulations that could change the course of their business.

What if there was a way to circumvent all this stress legally? To expedite market expansion and maximise revenue, businesses often seek streamlined solutions. One such option is a Merchant of Record (MoR), which eliminates many of the complexities associated with international expansion.

What is Merchant of Record

A Merchant of Record (MoR) is a legal entity that handles transactions, ensures legal compliance, manages currency changes, and provides customer support for another company. The MoR acts as the official seller in a transaction and takes on the legal and financial responsibilities.

By connecting to a Merchant of Record, a business can start doing business in a new market within a shorter time window. 

What does a Merchant of Record do?

• Payment Processing: The MoR manages the entire payment process, ensuring transactions are secure and efficient.

• Tax Compliance: The MoR calculates, collects, and pays taxes according to local laws, making sure the business follows all regulations.

• Currency Conversion: The MoR handles currency changes, allowing customers to pay in their local currencies while the business gets paid in its preferred currency.

• Fraud Prevention: The MoR uses advanced security measures to detect and prevent fraud, protecting both the business and its customers.

• Customer Support: The MoR provides customer service, dealing with transaction issues, refunds, or disputes.

How does the merchant of record model work?

When selling through a Merchant of Record (MoR), your customers continue to visit your website to browse and purchase products. However, the MoR acts as a reseller, facilitating two transactions: one between the end customer and the MoR, and another between the MoR and you.

Upon completion, the customer’s credit card statement reflects the MoR’s name, making them the technically liable party in case of disputes. This arrangement shifts the responsibility of handling customer interactions and potential issues to the MoR.

How does the MoR model impact your customer relationships?

While the MoR assumes certain obligations, such as sales tax calculation and remittance, your primary relationship remains with the end customer. You retain full control over product presentation, ongoing customer interactions, and marketing efforts. This includes implementing separate terms and conditions governing product use.

Is Startbutton a merchant of record?

Founded to simplify cross-border transactions, Startbutton offers comprehensive Merchant of Record services that help businesses expand across Africa and beyond. By using Startbutton, businesses can:

• Accept Local Payments: Startbutton lets businesses accept payments in multiple currencies, catering to local customer preferences and increasing sales.

• Get Settlements in Preferred Currency: With Startbutton’s unique solutions, you can receive payouts in your preferred international currency without hassle.

• Ensure Compliance: Startbutton’s deep understanding of local regulations ensures all transactions comply with tax laws, reducing legal risks.

• Provide Customer Support: Startbutton offers dedicated customer service, addressing transaction issues and enhancing customer satisfaction.

• Prevent Fraud: Startbutton uses advanced security measures to protect businesses from fraud, ensuring safe transactions.

In the global market, Startbutton is a strategic partner for businesses seeking to expand into Africa. With our comprehensive suite of payment solutions and expertise in navigating Africa’s regulatory landscape, Startbutton offers tailored services to streamline cross-border transactions and ensure compliance with local regulations. By leveraging Startbutton’s innovative solutions, your business can overcome the complexities of Africa’s business environment and unlock the vast opportunities it offers. 

Send an email to hello@startbutton.africa or visit www.startbutton.africa to get started today.

Payments in Africa remain a complex landscape. As a merchant, navigating the diverse payment methods and regulatory environments can be challenging. 

While domestic payments within key markets like Nigeria, South Africa, Kenya, and Ghana have seen significant advancements, with acceptance rates reaching 70-75% in tech-powered regions, the challenge lies in facilitating seamless cross-border transactions across the continent.

Even for neighbours like Ghana and Nigeria, the process of accepting payments across borders can be incredibly complex and time-consuming. Kweku, based in Accra, Ghana, faces numerous challenges in setting up Naira payments for his business. From burdensome regulations to the need for multiple integrations, the setup process can take months. This delay often means losing out on potential business opportunities or entering a saturated market.

You may be wondering, what are the numerous fintechs building payment networks in Africa doing? You see, it’s easy to think the problem is simple, but it’s not. Contrary to what many may think, this is not an infrastructure problem as much as it is a regulatory one. Granted, there is a sea of payment methods with diverse preferences across Africa, but the real issue preventing aggregators from offering all these methods in one go is regulation. Regulators in Africa have varying requirements, and interoperability is impracticable in such a fragmented landscape. In Europe, it is easy because there is central regulation, a central currency, and a central SEPA system that enables interoperability of the financial sector.

Africa is very different and highly fragmented. This births a rather broken system that makes payments more complex than they should be. But even if the payment infrastructure and regulatory issues are solved, there is still a big issue around FX volatility and cross-border settlements. On the FX side, merchants are unaware and may not know how to charge customers in local currencies or how to adjust the rate. Even if they can, managing about 44 currencies in Africa might be too challenging. An easy way to do this might be to manually adjust the rate daily or maintain a global currency charge. Charging customers in global currencies like USD, GBP, or EUR may reduce conversion rates because customers need to do the mental gymnastics of converting the global currencies into their local currencies and might be discouraged from proceeding with payments.

A new fintech niche: Merchant of record

However, companies are beginning to focus on a new area to enable cross-border commerce. And this new fintech niche is called merchant of record. With merchant of record solutions, companies like Startbutton, Ebanx, Dlocal, and Unlimit are making payment interoperability more seamless by stitching together the broken payment methods.

Some of these companies, like Startbutton Africa, offer not only the ability to receive payments in available local currencies across Africa but also provide dynamic currency conversion tools to ensure users can receive payments without losing money due to volatility.

Additionally, Merchant of Record solutions streamline cross-border operations by bundling essential services like payments, banking, regulations, subscriptions, funds transfers, and fraud management. This eliminates the need for merchants to integrate multiple solutions, saving them time and resources. Not only are merchants benefiting from these solutions, but global fintechs are also leveraging them to expand their payment offerings and reach new markets.

Having said all this, the question remains whether merchant of record solutions should be regulated like payment service providers (PSP). Given their merchant status, it’s unnecessary to require them to obtain a PSP license. However, countries should consider regulating them as designated non-financial institutions to ensure compliance with consumption taxes on foreign or digital goods. The future of this regulatory approach remains uncertain.

As of 2023, Africa had over 1,000 fintech companies. This number reflects a rapidly growing sector driven by increasing digital adoption and rising efforts toward financial inclusion across the continent. Despite this growth, many African fintechs have struggled to penetrate new markets substantially. A research study by McKinsey and Company suggests that fintechs could grow up to eight times if penetration levels reached those of market leaders. This shortcoming is primarily due to the absence of a comprehensive market expansion strategy, particularly in terms of product localisation.

Developing a successful market expansion and localisation strategy for new markets in Africa presents significant challenges for fintech companies. From understanding local regulations, to meeting the unique needs of local customers, the process of expanding into a new market requires thoughtful localisation. This guide offers you practical steps on how to adapt your fintech product for new African markets in other to drive market penetration and product adoption.

Conduct Thorough Market Research

Before entering a new market, thorough market research is essential. This research should cover aspects such as local regulations, competitive landscape, customer behaviour, and market demand. Understanding these factors helps fintech companies develop strategies that are well-suited to the local context. Thorough market research is the foundation of any effective market expansion strategy. It also aids in identifying potential challenges and opportunities, enabling informed decision-making.

Engage with Local Businesses and Fintech Hubs

After conducting market research, engaging with local businesses on the ground is the next critical step. This is one of the most effective ways to understand a new market. By engaging with businesses that are already established, fintechs can gain practical insights into the pain points of the target market and best practices.

A real-life case study is Quickteller Paypoint,  a utility bill payment and money service. During the COVID-19 pandemic, they engaged with micro and small businesses to understand their pain points. This led to the creation of solutions that helped these businesses directly, transitioning them from cash to digital transactions seamlessly. Such local businesses include Michael Terver’s cyber-cafe. The success of Quickteller Paypoint highlights the importance of local engagement for effective market expansion in Africa and customer adaptation to new financial technologies.

What’s more? Since the growth of a fintech is driven by its ability to address the needs of underserved populations and businesses, offering financial services that traditional banks often cannot. Engaging with local businesses helps fintech companies power inclusive growth and tailor their services to very specific needs that aren’t being met by traditional institutions.
Engaging with local fintech hubs and accelerators will also provide access to networks, resources, and mentorship. These organizations often have deep insights into the local market and can offer support in navigating challenges specific to the fintech industry.

Provide Local Customer Support

Providing local customer support is more crucial than assumed when entering an African market. Generally, customers prefer to speak with support staff who understand their context and can communicate effectively in a manner they are accustomed to.

According to payment gateway solution provider Akurateco, a key challenge encountered by customers when selecting a payment provider is the need for effective customer engagement and responsive support mechanisms.

This barrier extends beyond just language; it’s also about cultural and social understanding. For example, customers in Kenya might feel more comfortable talking to Kenyan support representatives, as it communicates a sense of familiarity and trust.

By leveraging local talent, fintech companies can ensure they are better equipped to navigate the cultural and economic landscapes of African markets, ultimately leading to more robust and trusting customer relationships.

Host Community Engagement Events

Building a strong presence in a new market involves more than just offering a product; it requires active community engagement. Hosting events and interacting with local communities can help fintech companies establish themselves as part of the local ecosystem.

These events provide opportunities to understand customer needs better, receive direct feedback, and create a loyal customer base. For instance, Branch, a personal finance company, has hosted numerous community events in Kenya and Nigeria. These events often focus on financial literacy, helping individuals understand how to use digital lending platforms effectively. By directly engaging with potential users, Branch has been able to build trust and expand its user base directly through these events.

Adapt Product Features To Local Needs

Different markets within Africa have differnt needs and preferences. This is why it is crucial to adapt product features to meet these local requirements. This includes modifying existing features or adding new ones in other to achieve a rewarding product-market fit.

Payment methods like Mobile Money are more popular in Ghana than in Nigeria. By integrating features relevant to the local market, fintech companies can enhance the usability and appeal of their products. Startbutton, a Merchant of Record fintech, adapts their services to offer features that resonate with local demands, allowing merchants to receive payments using the most popular and preferred payment option in any given country. This level of customization is essential for any market expansion and localisation effort to succeed in Africa.

Leverage Local Partnerships

Running fintech operations across different countries often requires forming strategic partnerships with local companies. These partnerships can offer access to established customer bases, local market knowledge, and additional resources.

Collaborating with local financial institutions, technology providers, and even competitors can significantly aid in localization. According to Sike Bamisebi, former CEO of Cellulant, partnering with competitors can provide mutual benefits, such as increased market reach and enhanced product offerings. A good example of this is how London-based fintech Verto, eased its way into the Kenyan market by collaborating with UBA Group, Kenya. Forming such partnerships is a vital element of a robust market expansion strategy in Africa.

Pricing Strategy Adaptation

Adapting your pricing strategy to match the economic conditions of a new market is crucial for making your product accessible and attractive. This can involve offering different pricing tiers, payment plans, or discounts tailored to the local audience.

A notable example is Spotify’s pricing strategy in Nigeria, where its Premium Family plan is offered at ₦1,400 per month (approximately $1.82), significantly lower than the $15.99 per month charged in the United States. By pricing their services in local currencies, Spotify ensures that the pricing is relevant and affordable for the local market, thereby increasing accessibility and adoption.

Brand Localisation

Localizing your brand involves more than just translating content. It requires adjusting your brand’s messaging, visuals, and overall presentation to resonate with the local culture and values. This might include using local languages, cultural symbols, and addressing local pain points in your marketing campaigns. Effective brand localization is a critical aspect of a comprehensive localisation and market expansion strategy.

Feedback and Iteration

Once your product is launched in the new market, continuously gather feedback from customers and iterate on your offerings. This agile approach allows you to make necessary adjustments based on real-time customer insights, ensuring that your product remains relevant and effective in meeting local needs. Continuously refining your product based on feedback is crucial for maintaining a successful market expansion.

Ready to expand your business to new African markets? Startbutton makes market entry seamless with tailored cross-border payment and compliance solutions. Discover how we can help you expand and thrive. Visit us at www.startbutton.com or email us at hello@startbutton.africa to get started today!

On July 1, 2024, Nigeria’s Deduction of Tax at Source (Withholding) Regulations 2024 came into force. These regulations aim to enforce the collection of Withholding Tax (“WHT”) at the point of payment for various transactions.

The “point of payment” refers to the moment when the payment for goods or services is. This means that under the new regulation, WHT is taken out by the payer at the time the payment is made to the recipient (service provider), whether it is during the actual payment transaction or when the liability is recognized.

Here’s what you need to know about the new regulations.

How it Works:

1. Deduction at Source: When a party makes a payment to a service provider/business, the party deducts the Withholding Tax from the total payment amount.

2. Remittance: The party (payer) then remits the deducted tax to the relevant tax authority.

Eligible Transactions and Their Rates

The regulations specify the transactions subject to WHT and the applicable rates, which is detailed in the First Schedule of the regulations. Some key points to note on the eligible transactions include:

1. Supply of Goods: WHT is deducted at source for the supply of goods and at the rate specified in the schedule.

2. Rendering of Services: Similar to the supply of goods, the tax rate is as specified for different forms of services.

3. Non-Passive Income: If the business/service provider/vendor does not have a Tax Identification Number (TIN), the tax rate is doubled.

Reduced rates apply on eligible transactions if there is a treaty between Nigeria and another country to avoid double taxation. This ensures that foreign investors from treaty countries benefit from lower tax rates.

Who Deducts the Tax?

The responsibility to deduct WHT at source falls on various entities, including:

1. Corporate Bodies: Both incorporated and unincorporated entities, except individuals.

2. Government Entities: Ministries, departments, and agencies.

3. Statutory Bodies and Public Authorities: Other institutions, organizations, establishments, or enterprises, even those exempt from tax.

4. Payment Agents: Acting on behalf of the above entities.

It is however important to note that Small companies, as defined under section 105 of the Companies Income Tax Act, are exempt from this requirement if the supplier has a valid TIN and the transaction value is N2,000,000.00 or less in a calendar month.

Deduction Timing and Remittance

WHT must be deducted at the time of payment or when the amount due is settled, whichever is earlier. For transactions between related parties, the deduction occurs at the point of payment or liability recognition, whichever comes first. For non-resident recipients, the deducted tax is the final tax unless further taxable presence is established in Nigeria.

WHT deductions must be remitted to the relevant tax authority:

• To the Federal Inland Revenue Service by the 21st of the following month.

• To a State Internal Revenue Service by the 10th or 30th of the following month, depending on the type of tax.

Withholding Tax (WHT) vs Value Added Tax (VAT)

Withholding tax (WHT) and Value Added Tax (VAT) serve different purposes and are applied differently:

• What are they: WHT is a tax on income, deducted at the source of payment and considered an advance payment of income tax. WHT are deducted at varying rates of 5-10% depending on the transaction.
  VAT on the other hand is a consumption tax levied on goods and services at each production or distribution stage. VAT is a consumption tax also administered by the Federal Inland Revenue Service when goods are purchased and services rendered. VAT is deducted at a rate of 7.5% in Nigeria.

• Who Bears the Cost: WHT is borne by the recipient of the payment (e.g., supplier or service provider), while VAT is ultimately borne by the final consumer of the goods or services.

• Purpose: WHT while facilitating revenue generation for the government, is intended to curb tax evasion by collecting tax in advance and ensuring that taxpayers are compliant to tax laws. VAT is purely designed to generate revenue for the government on the consumption of goods and services.

Penalties for Non-Compliance

Failure to comply with the new regulations attracts significant penalties. Not deducting or failing to remit deducted taxes by the due date results in penalties and interest, making compliance crucial for all liable entities.

Exemptions

Certain transactions are exempt from withholding tax deductions, including:

• Compensating payments under registered securities lending transactions.

• Dividend payments to Real Estate Investment Trusts.

• Specific across-the-counter transactions.

• Payments to Nigerian banks by direct debit of domiciled funds.

• Imported goods are not a taxable presence in Nigeria.

• Out-of-pocket expenses, insurance premiums, and certain energy supplies.

The new regulations mark a significant shift in Nigeria’s tax landscape, aiming to enhance compliance and streamline tax collection. By clearly defining who must deduct taxes, when to do so, and the penalties for non-compliance, these regulations are set to improve the efficiency of tax administration and reduce tax evasion. Entities involved in eligible transactions must familiarize themselves with these rules to ensure adherence and avoid penalties.

Ready to simplify your tax compliance under the new Withholding Tax regulations? Partner with Startbutton today to streamline your transactions and ensure you stay compliant. Visit Startbutton or contact us at hello@startbutton.africa to get started!

👋🏾Need help with staying compliant in African countries?

Startbutton helps businesses accept payment in African countries in a compliant and tax-efficient manner, without the need to register locally.

Send an email to hello@startbutton.africa or visit www.startbutton.africa to get started.

In the modern financial landscape, various methods of transferring money through the use of technology have become for both individuals and businesses. Among these methods, instant payments, RTGS (Real-Time Gross Settlement), and NEFT (National Electronic Funds Transfer) are some of the most used across Africa.

Understanding these systems is crucial for efficient financial management. This article looks into the specifics of each type of transfer and their application in Kenya and Nigeria.

Instant Payments

Instant payments refer to transactions that are processed and completed within seconds, ensuring immediate availability of funds to the recipient. These transfers are increasingly popular due to their speed and convenience, making them ideal for urgent payments and real-time financial transactions.

Instant Payments in:

• Kenya: The interbank money transfer solution Pesalink is a leading platform for instant payments . It allows users to transfer money instantly through their mobile phones, providing a quick and reliable method for financial transactions across the country.

• Nigeria: Instant payment services are provided by various platforms, including QuickTeller and Paga, as well as through the NIBSS Instant Payments (NIP) system. These platforms facilitate immediate fund transfers between bank accounts within the country.

Pros of Instant Payment:

• Speed: Funds are available almost immediately.

• Convenience: Easily accessible via mobile phones and online platforms.

• Ideal for Urgent Transactions: Suitable for emergency payments.

Cons of Instant Payment:

• Fees: Can be higher compared to other transfer methods. In Nigeria, the range for instant transfer fees typically varies from around NGN 10 to NGN 52 per transaction, depending on the platform and transaction amount. In Kenya, M-Pesa, for example, charges fees ranging from KES 0 to KES 105, depending on the transaction amount and whether the transfer is to another M-Pesa user or to a bank account.

• Limitations: Some platforms may have limits on the amount that can be transferred instantly. In Kenya, using M-Pesa for instance: M-Pesa allows transfers up to KES 150,000 per transaction, with a daily transaction limit of KES 300,000 while Quickteller and Paga allow transfers up to NGN 500,000 per transaction in Nigeria.

• Security Risks: There’s a higher risk of fraud if not properly managed

Real-Time Gross Settlement (RTGS)

RTGS is a system where the transfer of funds occurs in real-time and on a gross basis. This means transactions are processed individually as they occur rather than being batched together. RTGS is typically used for high-value transactions that require immediate clearing and settlement.

RTGS in:

• Kenya: The Kenya Electronic Payments and Settlement System (KEPSS) is the RTGS system used in Kenya. It handles large-value transactions and ensures that payments are settled in split-seconds providing a secure and efficient method for transferring substantial amounts of money.

• Nigeria: The Central Bank of Nigeria operates the RTGS system in Nigeria. It facilitates high-value interbank transactions and ensures that these are processed in real-time, contributing to the overall stability and efficiency of the financial system.

Pros of RTGS:

• Speed: Real-time processing ensures quick transfer of funds.

• Security: High level of security for large-value transactions.

• No Batch Processing: Each transaction is processed individually, reducing the risk of errors.

• Limitless Transfer Amount: RTGS payments typically have a minimum transaction amount but no maximum limit, allowing for the transfer of large sums of money without restrictions. The minimum amount varies by country. 

In Nigeria, the minimum amount for an RTGS transfer is ₦100,000. In Kenya, the minimum amount for an RTGS transfer is KES 1,000,000.

Cons of RTGS:

• Cost: Higher transaction fees, especially for high-value transactions.

In Kenya, RTGS transfer fees typically range from KES 500 to KES 1,000 per transaction. In Nigeria, the fees range from NGN 500 to NGN 1,250 per transaction.

• Availability: Typically available only during business hours.

In Kenya, the Kenya Electronic Payments and Settlement System (KEPSS) operates from 8:30 AM to 3:00 PM on weekdays. Similarly, in Nigeria, the Central Bank of Nigeria’s RTGS system is available from 8:00 AM to 4:00 PM on weekdays.

These restrictions means that transactions cannot be processed in real-time outside these hours, which could delay critical high-value transfers that occur after business hours or on weekends.

• Not Suitable for Small Transactions: Primarily designed for large-value 

National Electronic Funds Transfer (NEFT)

NEFT is a nationwide payment system that facilitates one-to-one funds transfers. Unlike RTGS, NEFT transactions are not settled in real-time but are processed in hourly batches. This method is suitable for smaller-value transactions that do not require immediate clearing. Additionally, NEFT is well-suited for bulk payments such as salaries, making it a practical choice for businesses managing payroll and other large-scale disbursements.

NEFT in:

Kenya: While Kenya does not have a system explicitly named NEFT, similar electronic funds transfer services are offered by banks, allowing for batch processing of smaller transactions. These services ensure efficient handling of routine payments and transfers.

Nigeria: In Nigeria, the NEFT system is managed by the Central Bank of Nigeria and allows for electronic transfer of funds between banks on a deferred net settlement basis. What this means is that the NEFT system in Nigeria facilitates electronic fund transfers between banks in a manner that economizes on processing by batching transactions and settling them on a net basis periodically throughout the day. Transactions are therefore processed in batches, providing a reliable method for transferring smaller amounts of money.

Pros of NEFT:

• Cost-Effective: Generally lower fees compared to instant payments and RTGS.In Nigeria and Kenya, the fees for NEFT (National Electronic Funds Transfer) can vary based on the bank and transaction amount. In Nigeria, fees typically range from NGN 52.50 to NGN 105 per transaction for amounts below NGN 500,000. For amounts above NGN 500,000, fees might range higher, up to around NGN 210 per transaction. In Kenya, fees generally range from KES 100 to KES 1,000 per transaction, depending on the bank and the amount being transferred.

• Accessibility: NEFTs are widely available for a variety of transaction amounts.

• Suitable for Routine Payments: Ideal for regular, smaller transactions.

Cons of NEFT:

• Speed: Slower compared to instant payments and RTGS due to batch processing.

• Not Real-Time: Funds availability may be delayed until the next processing batch.

• Limited Operating Hours: Transactions are processed only during specific times.

Understanding the different types of bank transfers—Instant payments, RTGS, and NEFT—is essential for making informed financial decisions. Each method offers unique advantages, catering to different needs, from urgent transactions to high-value transfers and routine payments. By leveraging these systems, individuals and businesses in Kenya and Nigeria can ensure efficient and secure financial operations.

The digital age has fostered a global marketplace, where businesses can seamlessly reach international customers. But navigating complexities like payment processing, tax compliance, and fraud prevention across borders can be a hurdle. This is where a Merchant of Record (MoR) becomes a game-changer. By handling these intricacies, an MoR allows businesses to focus on their core strength: delivering exceptional products and services. As companies expand internationally, partnering with an MoR ensures satisfied customers, streamlined operations, and long-term success.

What is a Merchant of Record (MoR)?

A Merchant of Record is a business that handles transactions, ensures legal compliance, manages currency changes, and provides customer support for another company. The MoR acts as the official seller in a transaction and takes on the legal and financial responsibilities. Here are the main tasks of an MoR:

1. Payment Processing: The MoR manages the entire payment process, ensuring transactions are secure and efficient.

2. Tax Compliance: The MoR calculates, collects, and pays taxes according to local laws, making sure the business follows all regulations.

3. Currency Conversion: The MoR handles currency changes, allowing customers to pay in their local currencies while the business gets paid in its preferred currency.

4. Fraud Prevention: The MoR uses advanced security measures to detect and prevent fraud, protecting both the business and its customers.

5. Customer Support: The MoR provides customer service, dealing with transaction issues, refunds, or disputes.

Why is a Merchant of Record Important for Modern Businesses?

In today’s global market, a Merchant of Record is more important than ever. Here’s why businesses should consider using an MoR:

1. Simplifying Global Expansion

Expanding into new markets involves dealing with many different rules, tax laws, and payment methods. An MoR handles these details, making it easier for businesses to enter new markets and focus on growth.

2. Ensuring Compliance

Following local laws and regulations can be a major challenge for businesses operating in multiple countries. An MoR ensures all transactions comply with local laws, reducing the risk of fines and legal problems.

3. Enhancing Customer Experience

Customers want a smooth and local shopping experience, including the ability to pay in their currency and get quick customer support. A reliable MoR makes this possible by handling currency conversion and providing dedicated customer service.

4. Mitigating Fraud Risk

Fraud is a big concern for online businesses, especially those operating internationally. An MoR uses advanced fraud detection and prevention methods to protect the business and its customers.

5. Optimising Financial Operations

Managing multiple currencies and tax systems can be costly and time-consuming. An MoR simplifies these processes, providing businesses with detailed financial reports and insights to help in decision-making.

Case Study: How Startbutton Helps Businesses

Startbutton is a great example of an effective Merchant of Record platform. Founded to simplify cross-border transactions, Startbutton offers comprehensive MoR services that help businesses expand across Africa and beyond. By using Startbutton, businesses can:

• Accept Local Payments: Startbutton lets businesses accept payments in multiple currencies, catering to local customer preferences and increasing sales.

• Get Settlements In Preferred Currency: With Startbutton’s unique solutions, you can receive payouts in your preferred international currency without hassle.

• Ensure Compliance: Startbutton’s deep understanding of local regulations ensures all transactions comply with tax laws, reducing legal risks.

• Provide Customer Support: Startbutton offers dedicated customer service, addressing transaction issues and enhancing customer satisfaction.

• Prevent Fraud: Startbutton uses advanced security measures to protect businesses from fraud, ensuring safe transactions.

In the global market, Startbutton is a strategic partner for businesses seeking to expand into Africa. With our comprehensive suite of payment solutions and expertise in navigating Africa’s regulatory landscape, Startbutton offers tailored services to streamline cross-border transactions and ensure compliance with local regulations. From Dynamic Currency Conversion to simplified licensing processes, Startbutton provides businesses with the tools they need to succeed in the African market. By leveraging Startbutton’s innovative solutions, your business can overcome the complexities of Africa’s business environment and unlock the vast opportunities it offers. 

Send an email to hello@startbutton.africa or visit www.startbutton.africa to get started.

At the recent Africa CEO Conference, in a moderated panel discussion, Aliko Dangote, CEO of Dangote Industries, raised some concerns about the efficiency of the Africa Continental Free Trade Area (AfCFTA) agreement whose enforcement began over 5 years ago today. The richest man in Africa pointed out some apparent constraints that persist when trading within the continent despite the AfCFTA agreement which was created to address these concerns.

“We need to make sure that it (AFcTA agreement) works. We cannot have a promising continent and our intra-trade (volume) is less than 16%,” Dangote said.

Many stakeholders share the same sentiment that the AfCFTA agreement is not working nearly as optimally as it was designed to over five years ago. This is owing to a plethora of issues, including ongoing negotiations and legislative restrictions which have led to a lack of proper implementation of the agreement’s details.

In this article, we review the efficacy of the AfCFTA agreement on its fifth anniversary.

What is the AfCFTA agreement all about?

The African Continental Free Trade Area (AfCFTA) is a one-of-a-kind trade agreement to establish the largest free trade zone in the world. This free trade zone would cover the entirety of the African continent, creating a unified market for goods and services for the 1.3 billion people across Africa. This initiative is designed to facilitate economic integration across the continent. The AfCFTA’s objectives include reducing tariffs among member states and addressing policies that hinder the intra-trade potential of the African continent.

Although the agreement received its most recent Instrument of Ramification in May 2022, members are committed to eliminating tariffs on goods and services over 5-13 years, covering at least three distinct negotiation phases. Over the last few years, the AfCTA has accomplished a few notable things.  

Achievements of the AfCFTA since its inception

Negotiation progress

For one, relevant negotiations have been going smoothly. The first round of negotiations has been completed birthing an agreement on protocols related to trade in goods and services and settlement of disputes, permitting the launch of trading. Phase II of negotiations regarding intellectual property rights and competition policy are underway.
Negotiations are also ongoing to remove tariffs on 90% of goods over 5-10 years. For another 7% of goods considered “sensitive,” tariffs will be removed over a 10-13 year period.

AfCFTA Guided Trade Initiative

In September/October 2022, the “AfCFTA Guided Trade Initiative” was launched as a pilot program to see if certain African countries were ready to trade under the new African Continental Free Trade Area rules. The goal was to test the new procedures and documents by having these countries trade important goods with each other at reduced tariffs. The initiative involved eight countries from five different regions of Africa: Cameroon, Ghana, Egypt, Tanzania, Kenya, Rwanda, Mauritius, and Tunisia, representing the different African regions. 
Although most of the products traded under the Guided Trade Initiative were low-value goods, mainly agricultural products like coffee and tea (except Exide batteries from Kenya to Ghana), this move represents a positive step for the future of the AfCTFA

AfCFTA Dispute Settlement Body Operationalised

On April 26, 2021, the AfCFTA Dispute Settlement Body held its inaugural meeting at the AfCFTA Secretariat. This pivotal moment marked the operationalisation of the body designed to handle disputes arising under the AfCFTA agreement, providing a structured mechanism for resolving trade disagreements and ensuring the smooth implementation of the agreement’s provisions

Launch of the Pan African Payment and Settlement System (PAPSS)

At the beginning of 2022, the Pan African Payment and Settlement System (PAPSS) was launched. This system, crucial for facilitating efficient and secure cross-border payments within Africa, aims to boost intra-African trade by reducing the dependency on foreign currencies and streamlining payment processes between African nations.

During the 54th Conference of African Ministers of Finance, Planning, and Economic Development in May 2022, the AfCFTA unveiled the ATEX platform. This Business-to-Business (B2B) tool is specifically designed to help African businesses find new markets within the continent. By focusing on the trade of basic commodities essential for production and supply chains, ATEX aims to foster economic growth and collaboration among African enterprises.

Launch of Trade Barriers Africa

Earlier, on January 13, 2020, AfCFTA introduced “Trade Barriers Africa,” a continental mechanism aimed at identifying and eliminating non-tariff barriers to trade. This initiative is a critical step towards creating a more conducive environment for trade by addressing issues that hinder the free flow of goods and services across African borders.

Unveiling of the AfCTFA Glossary

In 2022, the AfCFTA Secretariat, in collaboration with the International Trade Centre (ITC), launched the AfCFTA Glossary. This comprehensive resource was developed to provide clarity and consistency in the terminology used within the AfCFTA framework. However, despite its importance, the glossary has yet to be made available online, limiting its accessibility to stakeholders across the continent. These milestones represent significant strides in the quest for deeper economic integration and enhanced trade across Africa. As the AfCFTA continues to implement its ambitious agenda, these foundational achievements set the stage for a more unified and prosperous African economy.

Hurdles for International Businesses in AfCFTA

The African Continental Free Trade Area (AfCFTA) offers great opportunities for international businesses looking to expand in Africa. However, navigating the legal landscape can be challenging. Here are some key legal issues international companies may face in the AfCFTA region:

1. Tariff and Non-Tariff Barriers: While AfCFTA aims to eliminate tariffs on most goods, non-tariff barriers like customs procedures, import restrictions, and varying regulatory standards can still hinder trade. Companies need to ensure compliance with different national regulations.

2. Intellectual Property Rights: Protecting intellectual property (IP) is difficult due to varying IP laws and enforcement across African countries. Corporations must take measures to protect their IP while adapting to local laws.

3. Dispute Resolution: Resolving disputes can be complex for companies operating in multiple AfCFTA member states. Although AfCFTA has a Dispute Settlement Mechanism, its effectiveness is yet to be fully tested.

4. Inconsistent Legal Frameworks: Different legal systems in AfCFTA member states make it challenging to navigate the legal environment. Understanding local laws, regulations, and business practices is essential.

5. Regulatory Compliance: Each member state has its own regulatory requirements. International companies must be ready to meet various regional rules and standards.

6. Taxation and Customs: Tax systems vary significantly across countries. Companies must understand the tax implications of their operations in each member state and manage complex customs and import/export regulations.

7. Local Content Requirements: Some member states have local content laws that affect procurement and hiring practices. Companies need to be aware of and comply with these requirements.

8. Human Resources and Labor Laws: Labor laws and practices differ widely among African countries. Companies must be familiar with local labour regulations and consider cultural factors in employment practices.

Optimism for the Future of AfCTFA

Despite these obstacles, there is a strong sense of optimism about the future. The continued efforts to eliminate tariffs, harmonise regulations, and facilitate smoother trade processes are paving the way for a more integrated and prosperous African economy. The AfCFTA’s 2021 Futures Report opines that the AfCFTA is much more than a trade agreement.

“It should be seen as an instrument for Africa’s development. By driving the continent’s integration, the AfCFTA will result in wider and deeper RVCs [regional value chains], thereby laying foundations for a Made in Africa Revolution.”

This sentiment is shared by thousands of stakeholders who see the agreement as a step in the right direction to harness the economic potential of the continent and set the stage for growth among member states.

As the AfCFTA evolves and addresses these challenges, the vision of a unified, thriving African market comes closer to reality. The future looks promising, with the potential for increased trade, economic development, and improved livelihoods across the continent. The AfCFTA is not just a trade agreement; it is a transformative initiative that holds the promise of a brighter and more prosperous future for Africa.

Africa is a continent brimming with entrepreneurial spirit and untapped potential. If you’re considering starting a business or expanding to a new country in Africa, understanding the business registration process is crucial. Here’s a detailed breakdown of the general and specific requirements for business registration in five key African countries: Nigeria, Ghana, Rwanda, Kenya, and South Africa.

General Business Registration Requirements in Africa

While each African country has specific rules, most share common requirements for business registration:

1. Choosing a Business Structure: Decide whether your business will be a sole proprietorship, partnership, limited liability company (LLC), or another type. Each business structure has its unique registration process and requirements.

2. Name Reservation: Pick a unique and relevant name for your business. Most countries offer online name reservation services.

3. Registration Documents: These typically include business descriptions, information about directors/owners, and a memorandum of association (for certain structures).

4. Fees: Pay the required registration fees, stamp duties, and other governmental charges. Fees vary by country.

Business Registration Requirements According to Countries

Nigeria

Business Name Registration (suitable for sole proprietorships and small businesses):

• Name Reservation: Check and reserve your desired business name. Business owners are usually required to reserve two names.

• Business Nature: Briefly describe your business activities.

• Business Address: Provide the registered address of your business.

• Proprietor Information: Submit names, addresses, and occupations of the proprietors.

• Fees: Pay the filing and stamp duty fees.

Company Registration (suitable for larger businesses):

• Name Availability: Reserve your desired company name.

• Memorandum and Articles of Association: Define the company’s objectives and internal governance rules.

• Share Capital: Specify the authorised share capital and ownership structure.

• Directors and Shareholders Information: Provide details of directors and shareholders.

• Company Secretary: Required for companies with foreign ownership.

• Fees: Pay the stamp duty and filing fees.

Note that businesses in Nigeria can now remit taxes online via Tax Pro-max. Visit the Corporate Affairs Commission (CAC) website for more details on business registration in Nigeria.

Kenya

General Requirements:

• Unique Business Name: Check availability.

• eCitizen Portal Access: Register and use the eCitizen portal for applications.

• Proprietor Information: Provide National ID copies, passport photos, and contact details.

• Business Description: Outline your business activities.

Additional Requirements:

• Business Permit Application Form: Depending on your business type.

• KRA PIN Certificate: Obtain from the Kenya Revenue Authority.

• Unified Business Permit: Often required.

• Social Security Registrations: Register with NHIF and NSSF.

Visit the Kenya Investment Authority website for more details on business registration in Kenya.

Rwanda

General Registration Requirements:

• Unique Business Name: Check availability through the Rwanda Development Board’s (RDB) online portal.

• Company Structure: Decide on your business structure.

• RDB Registration Forms: Complete and submit the relevant forms.

• Identification Documents: Provide IDs for directors and shareholders.

• Memorandum of Association: Outline the company’s objectives and governance.

After Registration:

• Business License: Obtain from the local government.

Visit the Rwanda Development Board Business Registration website for more details on business registration in Rwanda.

Ghana

General Requirements:

• Business Name: Conduct a name search through the Registrar General’s Department (RGD).

• Business Structure: Choose your business structure.

• Registration Forms: Obtain the necessary forms from the RGD.

• Taxpayer Identification Number (TIN): Apply for a TIN for yourself or for each director/shareholder.

Additional Requirements:

• Sole Proprietorship: Complete Form A, pay processing fees, and provide proof of ID.

• Partnership: Complete Form B, pay fees, provide IDs, and submit a partnership agreement.

• Limited Liability Company: Provide extensive documentation, including Forms C and D, company regulations, a memorandum of association, and more.

Visit the Registrar General’s Department (RGD) website for more details on business registration in Ghana.

South Africa

General Requirements:

• Business Name Registration: Check availability through the Companies and Intellectual Property Commission (CIPC).

• CIPC Registration: Complete and submit the registration forms.

Additional Requirements:

• Business Permit: Depending on your industry.

• Tax Registration: Obtain a tax reference number from SARS.

• UIF Registration: Register with the Unemployment Insurance Fund if you have employees.

• Business Bank Account: Open a dedicated bank account.

Visit the Companies and Intellectual Property Commission (CIPC) website for more details on business registration in South Africa.

Differences Between Local and Foreign Incorporators

1. Share Capital: Foreign shareholders may trigger higher authorised share capital.

2. Bank Accounts: Opening accounts can be tedious with foreign shareholders.

3. Residence Permits: Foreign directors may need residence permits.

4. Local Citizen Shareholders: Some countries require a local shareholder.

5. Ease of Registration: Some countries have electronic registries; others require physical presence.

Expand Your Business With Startbutton Without Local Incorporation

Startbutton helps you expand your business across Africa without needing local incorporation. Our platform offers tailored solutions for market entry, compliance management, and tax remittance, making it easier to navigate regulatory landscapes.

For more details, visit Startbutton’s website or send email us at hello@startbutton.africa

In this edition of Startbutton story, Sales Associate, Ololade Olatunji shares interesting facts about herself, her Startbutton story, how she joined the team, and how her prior engagements inspired a career transition.

Tell me about your background and what drew you to Startbutton

My career path has been quite unconventional, starting as a product marketing intern and later transitioning into account management before ultimately finding my calling as a sales professional. What initially drew me to Startbutton was its innovative approach to simplifying cross-border commerce in Africa. The company’s vision resonated with my passion for driving business growth and empowering organizations to thrive in dynamic markets.

How would you describe your onboarding experience at Startbutton?

Startbutton reached out to me after recognizing my skills in the field, and the interview process was refreshingly straightforward yet insightful. It felt more like a genuine conversation than a formal interrogation, which made me feel valued and appreciated even before joining the team.

How was your onboarding experience?

My onboarding experience at Startbutton was seamless and welcoming. From the warm introductions to the comprehensive training sessions, I felt fully supported as I transitioned into my new role. The company’s dedication to ensuring every new employee feels empowered and equipped to succeed was evident from day one.

What are some of the most memorable moments from Startbutton?

One of the most memorable moments from my early days at Startbutton was meeting the CEO. His passion for the company’s vision was contagious, and his genuine enthusiasm for empowering businesses across Africa left a lasting impression on me. It was a defining moment that solidified my commitment to the company’s mission.

Can you share some insights into the company culture at Startbutton?

At Startbutton, the company culture is built on collaboration, trust, and mutual respect. Working with like-minded individuals who are not only passionate about their work but also supportive and collaborative has been incredibly rewarding. There’s a sense of community that enhances creativity, innovation, and overall job satisfaction.

What opportunities for growth and development have you encountered at Startbutton?

Startbutton prioritizes employee growth and development, offering various opportunities for professional advancement. From access to training courses and workshops to regular performance appraisals and constructive feedback, the company is committed to helping employees reach their full potential.

How has your role evolved since joining Startbutton?

Since joining Startbutton, my role has evolved significantly. What started as a sales position has transformed into a multifaceted role that allows me to contribute to various aspects of the business. I’ve been given the opportunity to take on new challenges, learn new skills, and grow both personally and professionally.

What do you enjoy most about working at Startbutton

What I enjoy most about working at Startbutton is the collaborative and supportive environment. Whether it’s brainstorming sessions with colleagues or receiving guidance from superiors, there’s always a sense of teamwork and camaraderie that makes every day enjoyable and fulfilling.

Can you recall any challenges you’ve faced during your time at Startbutton and how you overcame them?

Of course, there have been challenges along the way, but with the support of my team and the resources provided by Startbutton, I’ve been able to overcome them successfully. From navigating complex sales negotiations to adapting to the fast-paced nature of the industry, each challenge has been an opportunity for growth and learning.

What quote best describes your approach to work and life in general?

“Nothing is out of reach” epitomizes my approach to both work and life. It embodies my belief that with determination and perseverance, my goals are attainable. This mindset drives me to push boundaries, overcome obstacles, and pursue excellence in everything I do. Whether tackling challenges at work or embracing opportunities in life, I approach each with optimism and a commitment to succeeding.

How does Startbutton support work-life balance and employee well-being?

Startbutton recognizes the importance of work-life balance and prioritizes employee well-being. From flexible work arrangements to regular team-building activities and remote work options, the company actively promotes a healthy work-life balance and supports employee wellness.

What advice would you give to someone considering a career at Startbutton?

My advice would be to embrace the opportunity with an open mind and a willingness to learn. Ask questions, seek feedback, and take advantage of the growth opportunities available here. Most importantly, enjoy your journey and celebrate your successes along the way.

This week, the Central Bank of Nigeria (CBN), via a circular dated May 6th, directed banks to implement a “levy of 0.5% (0.005) equivalent to a half percent of all electronic transactions.” This directive, set to take effect on May 20th, mandates that the collected levy be remitted to the National Cybersecurity Fund (NCF), administered by the office of the National Security Adviser (ONSA). This development has raised several questions regarding the nature of the newly amended Act. Here’s a breakdown to clarify the confusion surrounding the CBN Cybersecurity levy.

Is It 0.5% or 0.005%?

The announcement has caused confusion regarding whether the deductible tax is 0.5% or 0.005%. The circular sent to payment service providers states:

“Levy of 0.5% (0.005) equivalent to a half percent of all electronic transactions valued by the business in the second schedule of the act is to be remitted…”

The value “0.005” is a decimal representation of “0.5%” and should not be taken as a percentage on its own. The accompanying statement clarifies that it is “equivalent to half percent…”. Therefore, the Cybersecurity Levy for ₦100,000 would be ₦500, while the sum on ₦10,000 will attract a levy of ₦50.

Who Bears the Brunt of the CBN Cybersecurity Levy?

The circular expressly states:

“The deducted amount shall be reflected in the customer’s account with the narration: Cybersecurity Levy.”

This implies that bank customers will bear the brunt of the newly adjusted tax levy, while financial institutions are responsible for remitting the collected funds.

Does the CBN Cybersecurity Levy Apply to All Transactions?

No, the CBN Cybersecurity Levy does not apply to all transactions. The third schedule of the announcement highlights 16 exemptions:

1. Loan disbursements and repayments

2. Salary payments

3. Intra-account transfers within the same bank or between different banks for the same customer

4. Intra-bank transfers between customers of the same bank

5. Other Financial Institutions instructions to their correspondent banks

6. Interbank placements

7. Banks’ transfers to CBN and vice-versa

8. Inter-branch transfers within a bank

9. Cheque clearing and settlements

10. Letters of Credits

11. Banks’ recapitalisation-related funding – only bulk funds movement from collection accounts

12. Savings and deposits, including transactions involving long-term investments such as Treasury Bills, Bonds, and Commercial Papers

13. Government Social Welfare Programmes transactions e.g., Pension payments

14. Non-profit and charitable transactions, including donations to registered non-profit organisations or charities

15. Educational institutions’ transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions

16. Transactions involving bank’s internal accounts such as suspense accounts, clearing accounts, profit and loss accounts, inter-branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts

Penalty for Non-Compliance

Section 44 (8) of the Act prescribes that failure to remit the levy is an offence, liable on conviction to a fine of not less than 2% of the annual turnover of the defaulting business, among other penalties.

Conclusion

While the motivation behind the imposition of the newly adjusted levy remains a subject of debate, the heavy penalty that accompanies non-compliance makes it non-negotiable for concerned financial institutions. Understanding the specifics of the CBN Cybersecurity Levy is crucial for both banks and customers to ensure compliance and avoid hefty fines.

By clarifying the CBN Cybersecurity Levy details, including its percentage, the responsible party for remittance, the types of transactions exempted, and the penalties for non-compliance, stakeholders can better navigate this new directive.

Explore Startbutton For Business Compliance and Tax-remittance Solutions

For businesses operating in Africa seeking trusted tax-compliance solutions, Startbutton provides a comprehensive platform tailored to meet your compliance needs. With a deep understanding of the intricate regulatory landscape across multiple African countries, Startbutton offers a suite of innovative solutions designed to streamline tax compliance processes and mitigate risks.

Send an email to hello@startbutton.africa or visit www.startbutton.africa to get started.

The month of April in Nigeria was marked significantly by an attempt to revive the oil and gas sector, through a series of ground-breaking executive orders on taxation in the sector. These three executive orders reveal strategies aimed at addressing key challenges, stimulating investment, enhancing local participation, and streamlining regulatory processes within the industry.

This article examines the details of these executive orders, their objectives, legal implications on tax compliance in Nigeria, and their anticipated impact on Nigeria’s oil and gas landscape.

Executive Order I: Incentives For Green Field Developments

The first executive order introduces a suite of incentives to bolster Greenfield developments within Nigeria’s oil and gas sector. These facilities are purpose-built to process crude oil and natural gas into valuable products such as gasoline, diesel, jet fuel, and petrochemicals.

Key Incentives:

• Tax Credits: Up to 30% for non-associated gas Greenfield developments in onshore and shallow water areas. Companies must commence production before 2029 to qualify.

• Investment Allowance: A 25% investment allowance on qualifying expenditures for Midstream projects.

Notably, the executive directory states:

“The gas tax credit shall apply for a maximum of 10 years, after which it shall become a gas tax allowance claimable at the respective rates set out.”

Objectives:

• Foster Investment: These incentives are designed to attract investment into the sector.

• Promote Gas Utilization: Encouraging the use of natural gas aligns with global energy transition priorities.

• Economic Diversification: By stimulating economic activity, these measures help diversify Nigeria’s economy.

• Curb Gas Flaring: Reducing gas flaring aligns with environmental goals.

• Value-Added Products: Creating products such as gasoline, diesel, and petrochemicals adds economic value.

These incentives not only stimulate investment but also demonstrate Nigeria’s commitment to sustainable energy practices and economic diversification.

Executive Order II: Presidential Directive on Local Content Compliance Requirements, 2024 (the LCC Directive)

The second executive order focuses on the activities of the Nigerian Content Development and Monitoring Board (NCDMB). It mandates the board to prioritize in-country capacity when approving Nigerian Content Plans (NCPs). This directive aims to prevent the approval of entities without proven substantive capacity, fostering genuine local participation and involvement of indigenous operators.

Key Provisions:

• Prioritization of In-Country Capacity: The NCDMB is instructed to approve only those NCPs that demonstrate substantial local capacity.

• Elimination of Shell Companies: The directive explicitly states: “The Board shall not approve a Nigerian Content Plan (NCP) that contains intermediary entities lacking the essential capacity to perform the services.”

Objectives:

• Increase Indigenous Participation: Aligns with the government’s vision to enhance local involvement in the oil and gas sector.

• Stimulate Economic Growth: By fostering genuine local participation, the directive aims to boost the local economy.

• Curb Intermediaries: Discourages the use of shell companies or intermediaries for executing projects, ensuring that benefits directly reach local entities.

This long-awaited order is designed to ensure that only capable and substantial local entities are involved in Nigeria’s oil and gas projects, thereby directly benefiting the local economy and enhancing indigenous participation.

“The Board shall not approve a Nigerian Content Plan (NCP) that contains intermediary entities lacking the essential capacity to perform the services.”

The order frowns on the use of shell companies or intermediaries to execute projects, thereby directly benefiting the local economy.

Executive Order III: Streamlining Approval Processes

The third executive order is designed to streamline approval processes within Nigeria’s oil and gas sector. This includes several significant measures aimed at enhancing efficiency and transparency.

Key Measures:

• Increased Approval Threshold: The approval threshold for production-sharing contracts and joint operating agreements is raised to $10 million.

• Extended Contract Duration: The order extends the duration of third-party contracts.

• Strict Timelines: Mandates strict timelines for approvals under the Nigeria Oil and Gas Industry Content Development Act.

Objectives:

• Ease of Doing Business: Simplifying the approval process makes it easier for businesses to operate within the sector.

• Reduce Bureaucratic Hurdles: Streamlined processes minimize red tape, speeding up project initiation and execution.

• Promote Transparency: Clearer guidelines and approval timelines enhance transparency in contracting processes.

• Attract Investment: By creating a more predictable and efficient regulatory environment, the order aims to attract both local and foreign investment.

This executive order aims to create a more conducive business environment within Nigeria’s oil and gas sector, encouraging investment through improved efficiency and transparency.

Legal Implications of Executive Orders On Tax Compliance

While executive orders derive their authority from substantive laws, questions about their consistency with existing legislation and constitutional provisions persist. Kenneth Eruk notes “The legal basis of amending tax laws through executive orders has always been an issue of contention.”
The introduction of executive orders amending tax laws in Nigeria could significantly impact tax compliance in several ways:

• Impact on Tax Revenue: The incentives designed to attract investment could reduce immediate tax revenue from the oil and gas sector. However, the long-term goal is to stimulate economic growth, which could ultimately increase the overall tax base.

• Judicial Review and Legal Challenges: The legal basis for amending tax laws through executive orders is contentious. There is potential for judicial review if conflicts with existing laws arise, which could create uncertainty and affect tax planning and compliance strategies.

• Enhanced Investor Confidence: Despite potential legal challenges, the optimism among stakeholders suggests these orders will boost investor confidence. This increased confidence could lead to greater compliance as companies are more willing to engage with the Nigerian market under clearer, more attractive tax regimes.

• Implementation Details: Stakeholders are awaiting further details on implementation. These details will be crucial for understanding the full scope of compliance requirements and ensuring that companies can accurately adhere to the new tax regulations.

Overall, while the executive orders may aim to streamline and improve Nigeria’s tax regime, ensuring compliance with the amended tax laws will require clear communication, effective enforcement, and support for businesses, particularly smaller enterprises.

👋🏾Need help with staying compliant in African countries? We’ve got you covered.

Startbutton helps businesses accept payment in African countries in a compliant and tax-efficient manner, without the need to register locally.

Send an email to hello@startbutton.africa or visit www.startbutton.africa to get started.

Africa has the second fastest-growing economy in the world, next to Asia. With such ripe market potential, Africa has become an object of global attention, attracting investments worldwide. The continent’s youthful and rapidly growing population creates a vibrant consumer base brimming with potential. This, combined with strong economic growth across various sectors, makes business expansion into Africa a priority for many.

However, navigating Africa’s unique business landscape requires an in-depth understanding of the nuances of the African market. Efficient cross-border payment solutions and knowledge of diverse business regulations are crucial for successful business expansion into Africa.

Understanding the payment landscape in Africa

The payment landscape in Africa is different compared to other continents. Mobile money, a type of alternative payment method, is widely used in African countries, unlike in Europe and North America. Payment preferences and practices also vary depending on the specific African region targeted. Here are some factors to consider in your business expansion efforts into Africa:

Unified Currency vs. Currency Diversity

For businesses expanding into Africa from continents like Europe, where there is a unified currency like the Euro (€), it is important to note that most African countries have not adopted a unified currency. The Euro (€) streamlines financial transactions across the Eurozone, eliminating the need for currency conversion and simplifying trade.

Conversely, Africa’s payment landscape is characterized by currency diversity. Most African countries use their own national currency. Additionally, many African countries experience currency hyper-inflation and instability, complicating financial transactions. These dynamics must be considered and provided for when expanding into African regions.

Inflationary Concerns

Africa grapples with inflationary pressures that can affect currency stability and impact payment processes. Unlike regions with more stable economic conditions, businesses in Africa must contend with fluctuating prices and currency values. Companies are advised to employ proactive strategies to mitigate risks and ensure financial stability.

Limited access to banking services and financial infrastructure, particularly in rural areas, impedes the adoption of digital payment solutions. Unreliable internet connectivity further compounds the problem. As a result, Africa has pioneered alternative payment solutions like MTN Momo and M-Pesa in Kenya. These innovations are pivotal to Africa’s payment landscape and should be considered when expanding into the continent.

Business Registration Concerns

Business registration in Africa varies significantly from other continents, presenting unique challenges and opportunities. Furthermore, each African country has its own distinct procedures and requirements for business registration. Understanding these variations is crucial for any company looking to expand into the continent. Here are specific business registration requirements for various African countries.

Legal and regulatory environment

For businesses new to Africa, navigating regulations can feel like a maze. Compared to regions with standardized rules, Africa’s regulatory landscape appears to be patchwork. Laws, policies, and regulatory bodies differ significantly across countries. This diversity stems from differences in legal systems, economic priorities, and levels of institutional development across the continent.

African countries have distinct legal frameworks governing financial transactions and payment systems. These frameworks include banking laws, tax laws, electronic payment regulations, consumer protection laws, and anti-money laundering (AML) regulations.

Licensing and Incorporation

The process for obtaining licenses and incorporating varies greatly across African countries. Some jurisdictions have streamlined procedures for licensing payment providers, while others impose stringent requirements, such as minimum capital thresholds, regulatory examinations, and ongoing reporting obligations. Navigating these requirements necessitates a thorough understanding of each country’s regulatory landscape and may involve engaging with multiple regulatory authorities.

Compliance Obligations

Compliance with regulatory requirements is essential for mitigating legal and reputational risks. However, compliance obligations differ significantly across African countries, posing challenges for businesses seeking to maintain consistent standards across operations. These obligations include customer due diligence, transaction monitoring, record-keeping, and reporting suspicious activities. Effective compliance programs tailored to each jurisdiction’s specific requirements are critical for maintaining regulatory compliance and payment system integrity.

Cross-Border Transactions

Cross-border payments present unique regulatory challenges due to differences in currency controls, foreign exchange regulations, and international payment standards. Businesses engaged in cross-border transactions must navigate these complexities to facilitate seamless and compliant payment flows. This may involve coordinating with multiple regulatory authorities, financial institutions, and payment networks.

Emerging Regulatory Trends

The regulatory landscape for payments in Africa is continuously evolving. This evolution is driven by technological advancements, changing consumer preferences, and shifting regulatory priorities. Emerging trends include promoting financial inclusion through innovative payment solutions and adopting digital identity and authentication mechanisms. Staying abreast of these developments and adapting compliance strategies is essential for navigating Africa’s dynamic payment landscape effectively.

Use Startbutton For Payment and Compliance Solutions in Africa

Despite these challenges, Africa’s evolving business and regulatory landscape also presents opportunities for innovation and growth. Emerging trends such as the promotion of financial inclusion and the adoption of digital identity underscore the importance of staying abreast of regulatory developments to have a competitive edge.

In this environment, Startbutton is a strategic partner for businesses seeking to expand into Africa. With our comprehensive suite of payment solutions and expertise in navigating Africa’s regulatory landscape, Startbutton offers tailored services to streamline cross-border transactions and ensure compliance with local regulations. From Dynamic Currency Conversion to simplified licensing processes, Startbutton provides businesses with the tools they need to succeed in the African market. By leveraging Startbutton’s innovative solutions, businesses can overcome the complexities of Africa’s business environment and unlock the vast opportunities it offers. 

Send an email to hello@startbutton.africa or visit www.startbutton.africa to get started.

In the world of cross-border commerce, businesses consistently strive to adopt comprehensive solutions to handle their online transactions efficiently and securely. In the discussion about efficient methods to receive payment online for multinational businesses, two concepts are recurring:  “Merchant of Record” (MoR) and “Payment Facilitators” (PayFacs). While both play crucial roles in facilitating online transactions, they serve distinct functions and cater to different needs within the payment ecosystem. Understanding the difference between these two entities is crucial to determining which to adopt for your business if you are looking to optimize your online payment processes.

What is a Merchant of Record (MoR)?

A Merchant of Record is a legal entity that assumes the responsibility for processing and managing online transactions on behalf of a seller or merchant.

Imagine you have an online business that sells custom-made jewellery to customers in different countries, when a customer attempts to make a purchase through your online platform, the MoR steps in to handle the entire payment process on behalf of your business. From processing transactions to managing refunds and chargebacks, the MoR ensures a seamless, secure payment experience and ensures compliance with relevant local regulations in the countries where the transaction originates.

Key characteristics of a Merchant of Record include:

Legal Liability: The MoR assumes legal liability for the transactions processed, meaning they are responsible for disputes, fraud, or compliance issues that may arise.

Fraud Management: MoRs play a crucial role in detecting and preventing fraudulent transactions, protecting both the business and its customers.

Ownership of Transactions: The MoR owns the customer relationship and transaction data, providing a seamless and consistent experience for both buyers and sellers.

Reporting and Reconciliation: MoRs handle reporting tasks, generating reports detailing sales, refunds, and chargebacks, and ensuring accurate recording and reconciliation of transactions in financial records.

Regulatory Compliance: MoRs help businesses comply with financial regulations such as PCI DSS, and KYC regulations to ensure transactions remain secure and legal.

Sales tax compliance: Additionally, MoRs are responsible for calculating, collecting, and remitting sales tax, VAT, or GST to the relevant tax authorities based on the business and customer location.

Global Expansion: MoRs typically offer services that enable businesses to expand globally by handling currency conversions, compliance with international regulations, and localization of payment methods.

What are Payment Facilitators (PayFacs)?

Payment Facilitators, on the other hand, are platforms that facilitate payment processing for multiple merchants under a single master merchant account. Instead of each merchant needing to establish their own merchant account with a financial institution, they can leverage the services of a Payment Facilitator to quickly and easily start accepting payments. It is essential to note that Payfacs often have depth in each market, offering a deeper understanding of local payment preferences and consumer behaviour. They typically provide solutions that cater to the unique needs of each region.

In contrast, Merchants of Records (MoRs) excel in aggregating the heavily fragmented payment options available to users in different countries, providing a unified and seamless payment experience across borders.

Key characteristics of Payment Facilitators include:

Transaction Processing: Payfacs handle transaction processing for multiple businesses using the aggregation model (explained below), simplifying the payment process for individual merchants.

Aggregation Model: PayFacs aggregate transactions from multiple merchants under their own merchant account, simplifying the onboarding process for smaller merchants.

Risk Management: PayFacs assess the risk associated with the sub-merchants they onboard. While they aim to onboard merchants quickly, they still conduct brisk assessments to mitigate fraud.

Limited legal Liability: While Payment Facilitators assume some level of risk, they typically have less legal liability compared to Merchants of Record since they do not take ownership of the transactions. Fixed Revenue Sharing Model: Payment Facilitators often operate a fixed revenue-sharing model, where they earn revenue by taking a fixed percentage of each transaction processed by their sub-merchants.

Let’s break down some distinctions between MORs and PayFacs

Choosing the Right Solution

When deciding between a Merchant of Record (MoR) and a Payment Facilitator (PayFac), businesses should consider their specific needs, scale, and growth objectives. Larger enterprises with global operations and complex payment requirements may find MoRs to be a better fit. This is because they offer comprehensive services and regulatory compliance while reducing business registration hassle. On the other hand, smaller merchants or startups looking for a quick and easy setup process may prefer the simplicity and agility offered by Payment Facilitators.

No matter which option you choose, it’s important to partner with a reputable provider that aligns with your business goals and values.

Explore Startbutton as Your Merchant of Record in Africa

For businesses operating in Africa seeking a trusted Merchant of Record solution, Startbutton provides seamless payment processing and a profound opportunity for global expansion with incorporation in more than 9 African countries. Take the next step in expanding your business across Africa by exploring Startbutton as your Merchant of Record partner today.

Send an email to hello@startbutton.africa or visit www.startbutton.africa to get started.

Earlier this week, the Federal Inland Revenue Service (FIRS) introduced a Self-Registration Module tagged “TaxPro-Max.” This web-based system empowers taxpayers to complete all registration processes independently online, revolutionizing the way taxes are remitted in Nigeria. This update allows taxpayers to register from anywhere, at any time, saving valuable time and resources. By streamlining the registration process, both taxpayers and FIRS benefit. With an online platform for registration, the FIRS seeks to enhance transparency in the tax system, fostering a more inclusive tax environment.

Benefits of TaxPro-Max in Taxation in Nigeria

TaxPro-Max offers several benefits for taxation in Nigeria:

1. Convenience and Accessibility: Taxpayers can now register from any location at any time, which significantly reduces the need for physical visits to tax offices.

2. Time and Resource Efficiency: The online registration process saves valuable time and resources for both taxpayers and the FIRS.

3. Transparency: An online platform promotes transparency in the tax system, helping to build trust between taxpayers and the government.

Addressing Challenges in Taxation in Nigeria

Despite the advantages, the new self-registration feature raises some concerns:

1. Technical Challenges: Not all taxpayers are tech-savvy or have reliable internet access. Some may experience technical difficulties and require assistance during the registration process.

2. Data Security: The safety of taxpayers’ personal and financial information is a major concern. The FIRS must implement robust security measures to safeguard data and prevent unauthorized access.

Enhancing Taxpayer Experience

The introduction of TaxPro-Max marks a significant milestone in Nigeria’s tax administration. By embracing technology and prioritizing the taxpayer experience, the FIRS aims to make the taxation process more efficient and user-friendly. However, to maximize the benefits of this new system, collaboration between the FIRS and taxpayers will be essential.

Ensuring Optimal Tax Compliance

If you seek further guidance on ensuring optimal tax compliance for your business, we are at your service. Please feel free to reach out to us via email at hello@startbutton.africa. Our dedicated team of experts is ready to assist you in navigating the intricacies of tax compliance and optimizing your business’s tax obligations.

The FIRS’ introduction of the Self-Registration Module on TaxPro-Max is a major advancement in taxation in Nigeria. By addressing the challenges and working collaboratively, we can ensure a more efficient and secure tax environment for all.

The TaxPro-Max system is set to revolutionize taxation in Nigeria, making the process more accessible and transparent. While challenges such as technical difficulties and data security concerns exist, they can be mitigated through robust support systems and stringent security measures. As we navigate the implications of this new system, ongoing collaboration between the FIRS and taxpayers will be crucial to its success. For any assistance with tax compliance, our team is here to help.

If you seek further guidance on ensuring optimal tax compliance for your business, we are at your service. Please feel free to reach out to us via email at hello@startbutton.africa. Our dedicated team of experts are ready to assist you in navigating the intricacies of tax compliance and optimizing your business’s tax obligations.

Africa is a diverse continent with over 40 currencies in circulation. Here, we will explore some of the top currencies that play a significant role in the economic landscape of the continent.

Top Currencies in Africa

1. West African CFA Franc (XOF):

   • Usage: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, Togo.

   • Region: West African Economic and Monetary Union (WAEMU).

2. Central African CFA Franc (XAF):

   • Usage: Cameroon, Central African Republic, Chad, Republic of the Congo, Equatorial Guinea, Gabon.

   • Region: Central African Economic and Monetary Community (CEMAC).

3. South African Rand (ZAR):

   • Usage: South Africa, Lesotho, Eswatini (formerly Swaziland), Namibia.

4. Nigerian Naira (NGN):

   • Usage: Nigeria.

5. Egyptian Pound (EGP):

   • Usage: Egypt.

6. Moroccan Dirham (MAD):

   • Usage: Morocco.

7. Algerian Dinar (DZD):

   • Usage: Algeria.

8. Tunisian Dinar (TND):

   • Usage: Tunisia.

9. Kenyan Shilling (KES):

   • Usage: Kenya.

10. Ghanaian Cedi (GHS):

    • Usage: Ghana.

11. Ethiopian Birr (ETB):

    • Usage: Ethiopia.

12. Angolan Kwanza (AOA):

    • Usage: Angola.

Most Widely Used Currency in Africa

The most widely used currency in Africa is the West African CFA Franc (XOF) and the Central African CFA Franc (XAF). These two currencies are pivotal in their respective regions:

• XOF: Used by eight countries in WAEMU.

• XAF: Used by six countries in CEMAC.

Both currencies facilitate commerce and economic stability in West and Central Africa.

Currencies with High Purchasing Power in Africa

1. Tunisian Dinar (TND): Known for its strong purchasing power due to Tunisia’s stable economy.

2. Moroccan Dirham (MAD): The resilience and stability of Morocco’s economy contribute to its high purchasing power.

3. Botswana Pula (BWP): Botswana’s diamond-driven economy and stable governance enhance its purchasing power.

4. Seychellois Rupee (SCR): High standard of living in Seychelles boosts the rupee’s purchasing power.

5. South African Rand (ZAR): South Africa’s developed economy provides a relatively strong purchasing power compared to other regional currencies.

6. Libyan Dinar (LYD): As of recent years, the Libyan dinar has the highest purchasing power in Africa, supported by Libya’s oil-rich economy.

Conclusion

Understanding the various currencies in Africa is essential for businesses and travellers. The diverse economic environments and the specific roles these currencies play are crucial for trade and investment decisions. The West African CFA Franc (XOF) and the Central African CFA Franc (XAF) stand out due to their widespread usage across multiple countries, while currencies like the Tunisian Dinar (TND) and the Libyan Dinar (LYD) boast high purchasing power.

Stay informed and navigate the economic landscapes of Africa with confidence, leveraging the power of knowledge about the continent’s diverse currencies.

In the global market, Startbutton is a strategic partner for businesses seeking to expand into Africa. With our comprehensive suite of payment solutions and expertise in navigating Africa’s regulatory landscape, Startbutton offers tailored services to streamline cross-border transactions and ensure compliance with local regulations. By leveraging Startbutton’s innovative solutions, your business can overcome the complexities of Africa’s business environment and unlock the vast opportunities it offers. 

Send an email to hello@startbutton.africa or visit www.startbutton.africa to get started today.