Thought Leadership

The Mobile Payment Industry In Sa: Market Analysis And Growth Dynamics

By April 19, 2021May 4th, 2021No Comments

It appears that Uganda, Kenya, Ghana, Mali, Senegal and Côte d’Ivoire have been forerunners in the race to secure reliable, flexible, cashless payment solutions. We may even be able to lay claim to bragging rights and call Africa the birthplace of mobile transaction systems. With sizeable portions of our continent’s populations unbanked or underbanked, the value of the mobile financial services market is second only to that of China.

Tech enabled business ecosystems linked through digital platforms make real-time, dynamic collaboration and cross border operations possible. These functionalities are fast gaining momentum in much larger global economies. Some sources maintain that, with 400 million users, the potential revenue in sub-Saharan Africa is around $500 billion – most of it in the form of person-to-person (P2P) payments. And, to ensure flexibility, most African countries have regulated that mobile wallets should be interoperable

GCB Bank (the largest bank in Ghana) places the current value of mobile transactions worldwide at between $ 15 – 20 trillion p.a. With COVID-19 still lurking on our doorsteps, players such as Snapscan, Zapper, Flickpay, iKhokha, Payment Pebble and Pocket POS have been leading the way in contactless transactions. And M-Pesa and Mukuru continue to gain momentum. It is also interesting to see new entrant, Huawei Pay, being integrated with Zapper to support the credit and debit cards of most major local banks.

It has never been more evident that it is time for old-school retail banks to develop innovative solutions to support economies. Traditional service providers need to play catch-up very quickly and work out how they can lower their overheads. They need to build alternative revenue streams at a scale large enough to ensure profitability. If not, tech and telecoms companies are bound to eat their lunch. We, for one, are holding thumbs that banks will catch up soon, because, as everyone knows, to create a new market is much easier than trying to leapfrog established ways of working.

Estimates vary greatly, but according to Statista the number of digital transaction users is set to exceed the 1.3 billion mark in 2023. The total transaction value looks to be growing by over 11 % p.a. The number of South African users should exceed 7 million in 2023. It is clear that cashless payment is fast taking over from legacy structures such as credit card support systems and cash handling facilities. Of course this has been accelerated even more by the onset and consequences of the Covid-19 global pandemic.

Informal vendors (and even car-guards!) are now able to receive payments safely and instantly and expand their customer base. Traders are reporting increases in sales, and many have indicated that it is the first time in their lives that they have been able to accumulate savings – often with the intent of starting another business. This is good news for developing countries.

Not limited to payments, mobile devices are also key to accessing critical services such as healthcare, higher education and ride sharing modes of transport – in short, a much-improved way of life. All this while the innovators are collecting invaluable usage data.

But, these are not the only non-financial benefits to users. Holistic opportunities are fast evolving to provide access to additional resources. Fintech companies have now deployed digital design and data analytics which link finance and electricity, for example. And, while solar energy is free, the upfront costs of installations inhibit uptake in our land of relatively plentiful sun. Again, mobile payments to the rescue. Mobile service providers are now financing loans and facilitating monthly repayments for solar installations. What a win.

Our conclusion: Entrenched consumer habits are rapidly changing for good. Mobile payments clearly spell Out with the Old – In with the New in our Rainbow Nation.

Altron Bytes Managed Solutions

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PO Box 3591, Johannesburg, 2000, South Africa
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