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10 Things to know about mobile payments in Africa

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10 Things to know about mobile payments in Africa
David Smith, from the Smart Card Institute

The trend of making payments using mobile wallets installed as applications on smartphones which sometimes makes use of Near Field Communication Technology and generally an internet connection is becoming widespread, and indeed Africa is not left out in the grand scheme of things.

In fact, Africa is embracing this seamless cashless payment method alongside the rest of the world. With some economies in the African continent forecasted to match-up with their western counterparts, the rise of mobile payments in the region is one of the pointers to a brighter future for the economy of the rising continent.

Here Are 10 Things to Know About Mobile Payments in Africa

1. It is The Trigger of Microfinance Digital Innovations

As mobile payments continue to dominate financial transactions in the world’s second largest continent, many microfinance agencies and businesses are getting innovative by the day by churning out products that can be synced with technology and reduce human intervention when interacting with them.

For instance, in Kenya, many financial institutions have taken proper advantage of M-Pesa in savings mobilization and loans issuing amongst other functionalities. The mobile payment system is triggering an innovative spirit in the African continent, and the prospects are looking great.

2. Free Insurance For Life is Going Rampant

Tigo, a mobile service in Ghana pioneered the free insurance policy linked to mobile phones before it went viral across the continent flooding through different markets in the business sector. Various mobile products come with this insurance policy which is quite simplistic and is always tied to the mobile wallet. It is gaining widespread prominence in the African market. Insurance is an important subject in any economy, and this is inspiring digital financial transactions in some parts of Africa.

3. Kenya Is In The Frontline Of Mobile Payments

With over 16million transactions taking place every day on the M-Pesa mobile money platform in Kenya, this East African nation is taking the lead in mobile money payments and is threatening to take a leading global position.

In Kenya, 93% of the adult population uses the mobile money services available, and that’s about the highest witnessed, not just in Africa, but in many parts of the third world countries across the globe. Furthermore, over 36million mobile money accounts are registered in diverse platforms across East Africa’s most vibrant economy making mobile payments commonplace in Kenya. Zimbabwe trails behind closely.

4. Africa And The Rest Of The Third World Countries Are Leading Globally

This time around, the developing nations topped the chart and shocked the rest of the world in the usage of one of the most valuable technological aids in finance and business. From the front-liners; Kenya to their South African counterparts in Zimbabwe and down the west in Uganda the mobile payment method of conducting financial transactions rule. Bangladesh, Pakistan and volatile Somalia are surprisingly doing well with mobile payments.

Naturally, countries in the developed climes would have easily taken the lead since they are always upfront when it comes to using technology to relieve stress in doing a lot of things not just in finance, this twist in statistics comes as a shocker and perspectives are being changed about the previously perceived dark continent.

5. Physical Cash is Still Predominant

Amidst the pervasive use of mobile payments, the physical exchange of cash for goods and services is yet to fade away and is still on the high side. One would have thought that the dependency on physical cash will gradually reduce, but that is not the case as many spenders still depend on the cash transactions.

For some who decide to retain cash in mobile wallets, like the 53 percent of mobile money users in Tanzania, they do so for the rainy days and emergencies situations but continue with their usual cash-in-hand transactions. In Bangladesh, the story is not the same but still narrows down to the usage of cash more often than the mobile electronic transactions. In Bangladesh, a mobile money service provider says customers prefer and feel more comfortable handing cash over the counter when conducting financial transactions.

6. Airtime Purchases And Bills Tops The Chart In Mobile Payment

While transferring funds from person to person across different banking platforms in different time zones got a lot easier, airtime and bills payment is stealing the show. East Africa holds a sizable portion of the 32% statistics of customers globally who use mobile payments for airtime top-up and 6% for taking care of their bills. This is not so surprising considering the number of telecom users in Africa doing great in business. Top mobile telecom brands in Africa like MTN, Vodacom, Maroc, and Telkom boasts of millions of subscribers across the continent, and they do airtime top-up on a daily basis.

7. Inactive Customers Are Becoming A Major Challenge

The mobile payment industry isn’t void of its own share of challenges, and inactive customers are the chief contributors to one of the problems faced by providers in Africa. Inactive customers are leading to the liquidation of some of the service providers of mobile money. Every business needs customers to thrive, and when these customers are partially involved or less active, the reverse is the case. Registering isn’t the problem, but active usage of the service is what should be encouraged even more.

8. The Remote Areas Are Huge Benefactors

In developing climes like Africa, most remote areas lack access to financial services and institutions. The mobile payments came as a huge relief for these areas as they can receive cash and make payments through mobile money service providers without having to travel miles away to a neighbouring metropolis before accessing a bank.

According to Michael Joseph, the Group Managing Director of Vodafone in Kenya, M-Pesa is a revolution that has empowered millions of impoverished people all over the world.

9. Financial Inclusion Is Thriving Via Mobile Payments

The success recorded by mobile payment outlets and service providers has encouraged many in the African region to embrace innovative financial services. Africa has previously been infamous for having the lowest figure of persons with bank accounts, but this is changing.

With the launch of M-Pesa in 2007, the figure of bank accounts owners in Kenya skyrocketed from 4 million bank account holders to 20 million. The partnership between M-Pesa and numerous financial institutions came as a game changer for the banking sector in a positive direction.

10. Mobiles Phones Triggered The explosion

For the most part, the success of mobile payments is anchored on the rise of mobile phones in Africa. Arguably, Africa is the largest market for the Asian mobile phone industry, and it’s been a field day for the Asians doing business in Africa.

Mobile phone users’ statistics have gone meteoric in the last decade, and that forms the basis for mobile payments since, in Africa, mobile phones are the major routes to access the internet. As a result, mobile payments extend into the remote confines of Africa because a larger percentage of Africans living in remote areas have access to mobile phones than even toilets.

As for Africa, mobile payment is not just a means of transaction anymore, it’s a way of life, and many have attested to the fact that life would have been more difficult without mobile payment tech. With mobile payments, the future of African digital space beams with promising lights and promises to open more doors of digital transformation and innovation for its rising economy.

Contributed by David Smith

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