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As African business owners, it is important to understand the payment landscape in the
continent, especially in the midst of digital transformation. Payment methods have undergone
significant changes over the years in Africa, and in this blog post, we will take a deep dive
into the history of payment methods in Africa, from barter trade to mobile payments.

Barter Trade

Before the advent of currency, barter trade was the primary mode of payment in Africa, as it
was for many civilizations across the globe. The system required two parties to exchange
goods and services without using cash. This method of payment was prevalent in rural areas
while urban areas relied on cowry shells, salt, and precious metals as currency.
Barter trade was a cumbersome mode of payment, and transactions were mostly restricted to
the local communities.

Precious Metals and Paper Currency

As Africa’s international trade grew, the need for a standardized mode of exchange became a necessity. Many African countries used precious metals like gold and silver as a mode of payment. In Ethiopia, the birr was the official currency, while Morocco used the dirham.

The use of precious metals to facilitate payments in Africa continued in the 19th century when paper was introduced. This ushered in a new era of payment systems, where paper money became the preferred mode of exchange. Colonial powers also issued their own currencies to these colonies, which were pegged to the value of gold and silver.

However, the use of precious metals and paper currency was limited to urban areas. The payment system was not reachable for people living in rural parts of the continent due to a lack of infrastructure, leading to financial exclusion.

Credit and Debit Cards

The use of credit and debit cards for payments has become increasingly common in Africa. Credit and debit cards are payment options that allow users to make secure transactions with just a swipe. This convenient and secure payment option has made it easy for Africans to make payments both locally and internationally.
The use of credit cards also led to the emergence of online payment systems like PayPal, which allowed users to pay with their credit or debit cards without having to enter any personal/payment information. This mode of payment has enabled African consumers to purchase goods and services from global retailers.

Mobile Payments in Africa

Mobile payments are quickly becoming the preferred mode of payment in Africa, due to their convenience and security. This method of payment involves using a mobile device or an app to access financial services such as money transfers, bill payments, and peer-to-peer payments. This form of payment is beneficial for both consumers and businesses, as it provides a secure, fast, and cost-effective way to make payments.

Mobile money services are now available in more than 50 African countries, bringing financial services to the unbanked population. This mode of payment has enabled millions of Africans living in rural areas to access basic financial services and make payments with their mobile phones without the need for bank accounts.

Blockchain Technology

Blockchain technology is a new payment method that is revolutionizing the way we do business. Blockchain provides a secure and transparent way to conduct transactions, reducing the risk of fraud. In Africa, blockchain technology is being used to provide financial services to the unbanked, breaking the barriers that traditional banking has put in place.
Africa has a rich history of payment methods, from barter trade to digital payments in recent times. The use of mobile payments has revolutionized the payment landscape in Africa, increasing financial inclusion and promoting economic growth. With the advent of blockchain technology, there is hope that traditional banking barriers will be broken down, promoting financial inclusion and supporting the growth of small businesses.
As African business owners, it is important to keep abreast of new developments in the payments industry to stay ahead of the curve and leverage new technology to grow your business. Learn how Cellulant can help you along the way.


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