How mobile money is shaping Africa’s payments landscape

Mariam Cassim is the Chief Executive Officer of Vodacom Financial Services. Image: Supplied.

Mariam Cassim is the Chief Executive Officer of Vodacom Financial Services. Image: Supplied.

Published Sep 2, 2022


By Mariam Cassim

Africa has undoubtedly developed an appetite for mobile payments – a trend accelerated by the global pandemic.

In the space of a few years, the continent’s payments landscape has shifted dramatically as mobile transactions eclipse traditional payment processes.

According to the World Economic Forum (WEF), in 2021, 84 percent of internet users in Kenya and 60 percent in Nigeria made payments regularly by mobile phone.

With 57 percent of people across the continent not holding a bank account and 75 percent of sub-Saharan Africans predicted to own a smartphone by 2025, the future of payments is certainly mobile.

This growth in mobile money will help to advance financial inclusion, especially for women-owned small-, medium-, and micro-sized enterprises (SMMEs).

In Sub-Saharan Africa, almost one in three business owners are women, but this vital sector of the economy faces unique barriers to accessing traditional finance, because many women are unbanked and excluded from lending opportunities, says the WEF.

Overcoming mobile-money barriers

South Africa’s contactless transactions have grown due to pandemic-induced hygiene concerns, as well as greater smartphone penetration. Contactless payments for daily essentials were 13 times higher in March 2020 than March 2019.

Vodacom South Africa now has 26.2 million smart devices on its network, a 13 percent increase on last year. But the country still has some catching up to do, with only 21 percent of internet users utilising mobile money.

And, according to a 2022 Financial Sector Outlook study, almost 90 percent of South Africans still prefer cash because it is anonymous, does not require mobile connectivity or a bank account, and there are no hidden fees.

One of the greatest challenges in accelerating the uptake of mobile money is moving from a cash-based ecosystem to a non-cash world.

I believe that creating awareness to change negative perceptions around digital transacting, which is viewed as either complicated or “unsafe” (due to a lack of digital literacy), can go a long way.

Ultimately, we need to demystify the technology and demonstrate its benefits to consumers and businesses to ensure that people trust digital financial services – including mobile money and contactless payments.

How mobile payment platforms could turn things around

Mobile payment platforms will ultimately be a game-changer in how consumers conduct financial transactions and access money.

For example, digital wallets now allow people to send money to recipients with valid South African cellphone numbers, even if they don’t have bank accounts.

They also enable safe and cashless, peer-to-peer remittances with no transaction fees.

The digital wallet removes the reams of paperwork typically involved in opening a bank account and makes it less cumbersome and more convenient for those who need to send and receive money, shop, and pay bills.

The digital nature of this type of payment means even those unable to access traditional banking services can do so in a digital wallet already available on an app.

Over the past few years, Vodacom Financial Services has identified opportunities to provide innovative products for those who struggle to access the traditional banking sector.

This has driven the development and introduction of the VodaPay super app, which has completely reshaped the way people interact with their money and live their lives.

The super app has 2.8 million downloads, with 1.9 million customers registered as published in the Vodacom Group trading update for the quarter ended 30 June 2022.

Through its digital wallet, VodaPay can be used to do everything from sending money to a loved one to paying utility bills, all in a single, consolidated app.

VodaPay also features micro-lending facilities that unbanked female entrepreneurs can take advantage of because it does not require a bank account or formal credit history.

Through a partnership programme, it breaks down the barriers to entry for SMMEs looking to grow and expand their businesses. Since its launch 10 months ago, VodaPay already features over 90 mini apps.

Looking ahead

The mobile money market is undergoing significant change, with new players constantly offering innovative solutions, and in Africa, digital wallets and super apps are driving that change.

This new status quo provides businesses of all sizes with an extraordinary opportunity to offer mobile-first ways of transacting. Importantly, it gives those who have previously struggled to access the traditional banking sector, such as women-owned SMMEs, new ways of being part of the economy.

I believe that as digital and mobile transactions outpace cash, thanks to greater smartphone penetration driving contactless payments, as well as increased digital literacy enabling trust, consumers and businesses will require more flexibility – and inclusion – in the way they manage and access their finances.

Mariam Cassim is the Chief Executive Officer of Vodacom Financial Services.