Since its inception, the payments industry has been shaped mostly by market needs rather than technology. This is evidenced by the phases Cellulant has gone through in providing financial solutions – from the early days that we did micro billing to facilitate people buying ringtones for $1 to where we are now providing payment solutions for merchants of all sizes across Africa.
Ultimately, consumer behaviours, digital adoption and business needs determine how the payments industry evolves.
Today, we can say that the growth of the payments industry in Africa is shaped by 5 key dimensions;
- The market and market forces shaping the growth of the payments industry.
The payments industry has a huge market across Africa, it is a 40-50 Billion Dollar segment. A good example is M-Pesa which is shy of a billion dollars in revenue in Kenya only. The key driver of growth in the industry is the change of digitization which is driven by the natural progression of African markets as they automate, get more sophisticated and digitized & regulators who are driving digital inclusion and financial inclusion.
2. Segments in the markets that are driving the demand for payments.
There are 4 key segments; global customers, regional customers, large customers and small and medium-sized businesses. The global customers are those who are looking to make payments with Africa, in Africa and across Africa. Regional customers are those looking to do the same across the markets as Africa gets increasingly connected. The large customers are those with large customer bases looking for convenient ways to get paid by their customers. Small and medium-sized businesses are those that do not have the infrastructure to build a footprint across many markets and can only collect digitally.
3. The payment methods that most consumers in Africa will use over the next couple of years.
Mobile money cannot be ignored in Africa, we have just above 400 Million mobile money users in the continent and more banks are now digitally enabled with Africa having about 350 Million bank accounts. Payment methods from banks, direct from bank, EFT (Electronic Funds Transfer) and newer versions of Swift will become significant payment methods. Lastly, Proximity payment methods cannot be ignored, they continue to be a very large payment method in the continent. We will see these different payment methods in different forms continue to drive payments.
4. Who the players in the payments industry could be.
Mobile Money Operators are and will continue to be the largest players across many markets. Banks are the second largest players since payments are a significant part of banks. Banks will have to innovate from traditional card acquiring to digital payments acquiring, mobile payments acquiring and other types of payments. Fintech players of different kinds are also going to dominate the payments industry. The global traditional payment players; card companies, traditional acquirers and processors will also become significant players. The global brands that are traditionally non-payments e.g. Google, Facebook will also become significant and active players in the ecosystem.
5. The technologies that might drive the payments industry.
The good old-fashioned USSD and SMS will continue to be significant channels for payments across the continent because of their accessibility. Application platforms and facilitating E-Commerce, mobile commerce and associated technologies will also be significant payment platforms. Data science, AI, and machine learning are also going to play a great role in powering the payments landscape from fraud management, credit rating and powering systems. Card technologies from swipe, punch a pin, tap and pay and NFC will drive proximity payments. Finally, other different traditional technologies and newer kids on the block like blockchain will help form a good mix in the future of payments across the continent.