M-commerce, fuelled by mobile banking and payments technology, may be the winning formula for African banks to profit from long-anticipated economic growth on the continent.

Mobile Money: Africa Vs the World

Moving away from cards to the African success story, Mobile Payments and Banking. Banks have been slow to recognise and take advantage of the opportunities created by mobile technology, leaving this space wide open to Mobile Network Operators (MNOs) to gain first mover advantage and disrupt the status-quo. From the graphs below (volume and value), we can see that the biggest adopter of Mobile Payments is East Africa and Kenya in particular with M-Pesa and the recent entry of Equity Bank in this space. In our country segments we explore the different mobile models and the different responses of regulators to the “mobile payments revolution”.

Mobile Money Transactions by Volume

Mobile Money Transactions by Volume

Card Transactions – Africa vs Global

The card purchase transactions for U.S., Canada, Latin America, Europe, Middle East-Africa, and Asia-Pacifi c are based on the 2013 numbers. These figures have then been extrapolated to give a view of what the numbers would look like in 2023. Looking at the current pace of developments on the continent and the focus by central banks; banks and non-bank financial institutions on putting infrastructure (channels) to accept cards (physical and virtual), it is anticipated that the growth in card transactions (primarily debit cards) to be much greater that the published combined (Middle East & Africa) market share of 1,7%.

Mobile money Africa vs the world

Mobile money Africa vs the world

Fast Facts While it is true that around 94% of all retail payment transactions (urban and rural) across Africa are still conducted in cash, central banks are now focusing on driving down the usage of cash and promoting electronic channels and mechanisms such as card, mobile, POS and ATM. Most financial institutions, in conjunction with the card associations, chose cards as their first strategy to reduce the value of cash transactions by promoting the use of cards through their chosen channels (ATM, POS, Internet) To illustrate this, we have looked at the different associations and their share of the global card market. In addition, we have also provided a view of what share (%) of global purchase transactions are done via card as well as the related transaction values.

Please click here to download the Payment Developments in Africa 2015, Vol. 1

David Okwara

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