Online and mobile payments are taking off in Africa as a combination of improved internet access, advanced financial systems and widespread mobile penetration help spur demand for services.
However, the ability to pay and accept payments on the continent are not without their challenges, principally around risk and settlement.
“For the last decade, the ability to pay online, north of South Africa, has been difficult for a number of reasons – but it’s rapidly improving and that creates significant opportunities,” says Peter Stenslunde, executive director of Wirecard South Africa.
He says e-commerce and online credit card payments are high-growth industries in Africa and mobile wallet technology and mobile money even more so.
“Many banks in Africa are new to e-commerce and they don’t have the experience or the necessary systems in place to handle risk and settlement, for example.
“In many cases the technology they use is reaching the end of its life or they simply don’t have it,” he says. “For these reasons banks are happy to outsource services to fintech companies with a global acquiring platform. This gives them access to new markets, merchants, customers and opportunities. The digitised payment platforms we employ are designed to evolve rapidly.”
Stenslunde says in Africa the travel and mobility sector in particular, as well as digital and consumer goods are all good candidates for new fintech solutions.
He adds that mobile wallets are another huge growth opportunity and that technology developed in Africa far supersedes that in other parts of the world.
“A mobile wallet allows you to store, send and receive money from a mobile phone. It is usually linked to an electronic wallet which is essentially an electronic bank account that your phone uses to transfer value to merchants for the payment of goods. You can then use your phone to buy value-added services like electricity and pay various bills at those merchants who accept mobile wallet payments.
“It is a way for people who aren’t traditionally banked with a bank account to be financially included by making payments on their mobile phones rather than with cash. It’s a huge industry that’s growing because there is so much cash sitting around in people’s wallets in Africa.”
A recent World Economic Forum report on Global Trade says in sub-Saharan Africa, 12% of adults (64-million adults) have mobile money accounts (compared to just 2% worldwide), and 45% of them only have a mobile money account.
“As the newly-banked population becomes connected to mobile payments, it’ll be much easier for them to participate in global trade, either as consumers or businesses.”