In 2010, Kenyan payments, money transfer and micro-financing service M-Pesa became the most successful mobile phone based financial service in the developing world, just three years after the launch by network operators Vodafone and Safaricom. Since then, while other developing markets such as the APAC and LATAM regions have dominated headlines, the African continent’s success in digital payments has not been appreciated to a similar extent. There is more to digital payments in Africa than M-Pesa, and this piece will still only capture a snapshot of African success.
Beyond M-Pesa and beyond maturity
According to Nana Araba Abban, head, group consumer banking at Ecobank Group, transaction flows sent by banks have grown by an average of 10% year-on-year during this 10-year period. Alongside this, mobile money payments have exploded, with the monthly value of transactions increasing 25 times over between 2010 and 2018.
The African digital payments evolution has also led to “banks adopting a mobile-led digital transformation strategy to reach more customers that their services were unavailable to with traditional models,” Abban says and adds that with “light KYC accounts operated on mobile devices, instant mobile payments including the use of QR technology,” banks are partnering with telcos to facilitate mobile money transactions.
Ecobank, for example, has introduced services like Rapidtransfer for instant cross-border payments across their network of 33 countries in Africa. For ecommerce businesses, cross-border payments are an integral part of day to day operations and allow business owners to transfer funds across different territories in the most secure and efficient way possible, making real-time international payments a reality.
While SWIFT gpi, Visa Direct and Mastercard Send are providing fast and secure global payments, banks are also establishing agent networks to expand financial inclusion, serving customers in neighbourhoods in which they work and live. Ecobank currently has 44,000 agents in a network launched less than three years ago, for example.
Furthermore, in conversation with Dare Okoudjou, founder and CEO of MFS Africa, he says that “M-Pesa was a long time ago and if we were to take a global view, there are around 290 M-Pesa-like schemes around the world. Almost 80 of those services have more than one million active daily users. But Africa remains the epicentre of that market."
Cross-border challenges
According to Brookings, intra-African trade is at 17% compared to 59% in Asia and 69% in Europe. The implementation of the Africa Continental Free Trade Agreement (AfCFTA) is […]