In this exclusive two-part interview with Lineshree Moodley, Country Head for Visa South Africa, we will embark on a journey to explore the ever-evolving landscape of payments, fintech, and e-commerce in Africa. In part-one of the interview Lineshree shares her valuable insights on current trends in the fintech and e-commerce sectors and how this is set to transform the digital payments landscape in the coming years.
1. What are the current trends in the fintech and e-commerce sectors in Africa & how are they shaping the future of payments?
The outlook for digital payments in 2023 is characterized by growth, innovation, and enhanced security measures.
The continued adoption of mobile payments, integration of new technologies, and the exploration of digital currencies has shaped the future of digital payments, providing users with more convenience, security, and flexibility in their payment transactions.
We have seen that when you enable digital payments you add about one percentage point to the annual GDPs of mature economies and more than three percentage points to those of emerging economies
2. Contactless and Mobile Payments
Contactless payment technology, presents a significant opportunity. E-commerce payment volume has grown by 3x in Africa over the past five years. The adoption of contactless payments through cards and mobile wallets like Apple Pay and Google Pay will continue to grow.
Integrating digital payment cards into mobile wallets like Apple Pay, Google Pay, and Samsung Pay offers users a seamless and secure way to make payments using their smartphones. Across the world, it is estimated more than half of the population will be using a mobile wallet by 2025.
3. Sustainable spending
Consumers’ lives are becoming inherently interconnected, as they adopt the globally communal goal of sustaining our planet. In the world of financial services, there is untapped potential.
Examples of sustainable banking and payments business models are emerging in the marketplace that focus on helping consumers live more sustainable lifestyles. Companies focused on climate first include Tomorrow, Future (FutureCard), and Vancity.
Payment providers can adapt their services to align with this untapped opportunity: with a direct line-of-sight to everyday spending, they can use digital tools to help consumers understand the environmental impact of their buying decisions and to behave more sustainably.
4. B2B goes 3.0
Driven in large part by the fintech community, the B2B payments space is changing and at pace. There is recognition that B2B buyers are people first and that they have come to expect people-centered products and services.
In 2023 and beyond, we’ll see a 3.0 version of B2B payments — with consumer-like experiences on both the issuing and the acquiring sides of the B2B payments process.
But, for growing firms, there is an opportunity for more simplicity, convenience, and accessibility. As a result, businesses are seeking payment services that are cost-efficient, digital-first, and fast. Findings from a recent survey indicate that many U.S. small businesses are considering moving from their current banks to pay techs and big techs as they look for integrated solutions.
As growing businesses look for one-stop-shop payments providers, where cards are one part of an overall integrated solution, there is an opportunity for financial service providers to step in and build new solutions to address these needs.
5. Web3 technologies matter
Looking past the turbulent cryptocurrency trading markets and high-visibility collapses reveal foundational “web3” (inclusive of blockchain, digital currencies, NFTs, and metaverse) technology innovations that businesses can no longer ignore.
For example, the metaverse is enabling virtual workspaces to be piloted and launched by big tech players (e.g., Meta’s Horizon Workrooms, Microsoft’s Mesh, etc.), and NFTs are increasingly being viewed as more than a collectible by both consumers and brands. Regulatory guidance for web3 assets is bound to increase in the near term, shaping how banks can offer digital currency products and services.
High customer demand for digital currencies has increased the need for financial players to offer regulated cryptocurrency options. In addition, financial services should consider shifting focus to extracting utility from web3 technologies. One example is improving employee engagement with internal training hosted in the metaverse and gamified using NFT rewards.
6. Mobile Wallets are Becoming Universal
Consumers’ shift away from using cash accelerated during the pandemic, and digital card solutions, such as mobile wallets, emerged to meet consumer demand for fast, convenient, and contactless payments. Across the world, it is estimated more than half of the population will be using a mobile wallet by 2025.
This rapid uptick in adoption of mobile wallets is being facilitated by expanding use cases even outside the traditional payments landscape. For example, wallets are now being used for ticketing, car keys, hotel keys, loyalty offers, digital identity, transit, vaccination records, and more.
The impacts of these new digital card solutions have largely been positive with customer engagement and spending increasing. This spells opportunity for payments providers to revisit and invest in digital capabilities such as wallet strategies to drive further activation and usage.
7. Buy Now Pay Later (BNPL) shift is underway
For the past couple years, the Buy Now Pay Later (BNPL) market landscape has been changing quickly. But it has hit a new level of dynamism-come-disruption. Cooling market enthusiasm around BNPL lenders in recent months offers a stark contrast to their meteoric rise during the pandemic.
In the last year, a slew of BNPL providers have had their valuations and market capitalizations come crashing back to earth. These drawdowns were driven by increased regulatory scrutiny, delinquencies, and dampening market sentiment.