The Rise Of e-Payments in Africa

Barter-style systems have existed for over one hundred thousand years. It is an accepted fact that the first evidence of money use dates back to three thousand years before Christ in Mesopotamia, with stamped coins getting invented around six hundred years BC, according to most scholars. Today, the world is moving away from cash-based economies and shifting transactions to the online sphere. Based on the publicly-released data, cash transactions post-2017 fell by 17% annually, with countries around the globe noticing a massive drop in the COVID and post-COVID eras. The UK noted a 35% decrease in coin/note use in 2020, highlighting how quickly the conversion to a cashless society is happening in developed regions.

This worldwide shift has not escaped Africa. The e-payments landscape is also experiencing a transformative change in the world’s second-most populous slice of Earth. A convergence of a supportive regulatory framework and technological innovations propels this evolution on the Mother Continent. Naturally, this is also happening along with changing consumer behavior. In the past years, African telecommunications companies have emerged as vital transaction players. They have assumed this role by leveraging their extensive networks to pioneer mobile financial services.

Hence, fintech in Africa has boomed, as shown by data that 60% of venture funding exceeding $200,000 goes to the country’s fintech firms. This signals that foreign and domestic investors recognize the untapped opportunities and favorable market dynamics for many. Moreover, the regulatory landscape is now evolving to foster financial inclusion. That can be deduced by a staggering amount of business entities adopting Know Your Customer requirements. For some, this is primarily due to the rise of credit card casinos in the region and more and more companies exploring open-banking regulations to accelerate digitalization. Collaborative efforts, such as the Pan-African Payment and Settlement System, have also enhanced cross-border transactions. They have boosted the adoption of banking alternatives, and below, we do a quick dive into Africa’s swelling e-payment arena.

Africa is Becoming the Digital Payment Leader

That is a fact. In recent years, countries like Uganda, Rwanda, Kenya, Sierra Leone, and Senegal have brought forward various policy frameworks regarding economic digital transformation. That has led these and other nations to establish institutions essential for building/scaling digital public infrastructure and brought a projected 70% of the worldwide mobile money transfers to Africa. However, it should be said that there is an uneven growth distribution regarding the fintech industry here, with South Africa, Nigeria, Kenya, Ghana, and Egypt accounting for the lion’s share of this mobile payment pool.

Opportunities for e-Payment Growth in Africa

Multiple high-end financial consulting firms consider Africa a territory poised for fintech expansion. That opinion is mostly held on account of its growing middle class. The African Development Bank Group believes that the number of middle-of-the-road income individuals in Africa will hit 1.1 billion in 2030, a staggering three-fold increase from where this number was in 2015. The DBG credits this figure as the chief factor for the burgeoning e-payment market. That is so because this demographic is super likely to adopt it quickly.

As discussed above, mobile commerce and tech also drive this transaction field. GSMA noted that Africa had 1.2 billion registered mobile money accounts. That comes to equal the continent’s population. It should be noted that Euromonitor International believes that transactions of over $600 billion occurred in 2022 in the sub-Saharan section alone.

Technological developments like AI, apps, and blockchains are expected to keep aiding this money transfer arena to become more powerful and robust.

Most Popular Digital Payment Methods Used

Despite everything above, cash is still the most prominent payment pick, primarily since credit/debit cards are rare in Africa.

It is pivotal to add that each African country has its e-wallet and mobile payment solutions. For example, in Egypt, Fawry is a digital wallet service that the Central Bank of Egypt endorses for utility bill payments. In South Africa, Zapper is a favored choice from this transaction genre. It is advertised as a secure and quick payment option for residents of the Rainbow Nation.

Paystack and Flutterwave have also made sizeable headway in this market as African picks, and Skrill and PayPal have done the same as internationally available ones.

E-Payment Challenges in Africa

Despite the fact that the e-payment value in 2023 will exceed $195 billion in Africa, the World Bank cites a need for more infrastructure in many countries. The organization backs this claim with statistics showing that only a disappointing 40% of Africans can access the Internet, and 550 million still need digital identification. Furthermore, the World Economic Forum cites that Africans get super worried about utilizing their data when they share it online, with 54% of residents of this part of the world expressing such concerns.

There is also a lack of awareness regarding digital payments in Africa, and most of the continent’s inhabitants worry about the high fees that usually come with using methods that fall into this category, along with fraud fears.

To Sum Up

Without question, Africa’s e-payment industry has surged amid a global shift to cashless transactions, mainly powered by a novel regulatory framework and technological innovations. Sectors like e-commerce and online gambling have significantly expanded the number of people who accept new payment solutions quickly. Hence, thanks to the growing African middle class and upcoming tech advancements, cash will likely go the way of the dodo in this century, everywhere, Africa included.