Africa is uniquely poised for an electronic payment revolution

Moving money between neighbouring African countries using traditional payment systems often requires sending it around the planet.

Absa Corporate and Investment Banking says it's an absurdity that new, tech-driven solutions intend to avoid.

These solutions are easier to use and more efficient than traditional systems, but challenges remain.

Payment solutions must be flexible, and they can’t operate like current systems that require beneficiaries to carry some of the cost.

Cheapness by itself won’t drive adoption either. Consumers will embrace a slightly more expensive yet transparent process faster than one that is inexpensive, yet obscure or slow.

Balancing these factors is crucial.

Sending money should be as simple as pressing a couple of buttons and seeing the funds in the beneficiary’s account almost instantly.

(Also, read: "How to make it easy for Africans to move money")

By Ndiwulira (https://commons.wikimedia.org/w/index.php?curid=64296214)

Network effects

Besides a simple user-interface, ease-of-use also relates to the size of the network the payment-solution is plugged into.

There’s no point in having a simple process if only a few people in a few places can use it.

Zimbabwe – and its estimated three million citizens living in South Africa - presents an example of the potential complexities of the challenge.

Cash is scarce in Zimbabwe and, as a result, the country has adopted mobile and digital payments. However, workers trying to send money home still rely on the beneficiary’s access to cash wherever they receive payment.

What is needed is the ability to transfer funds that a beneficiary can spend digitally in Zimbabwe’s shops and with its service providers.

The challenges are not technological

The technology required to underpin fast, transparent and cost-effective mobile payments infrastructure exists. The real challenge is one of design and effective network-building so millions can use it across the continent’s 54 countries.

The companies that end up dominating will be those that manage to form alliances and connections between financial institutions, governments, outlets and telecoms firms.

Traditional banks with pre-funded accounts are best placed to drive initial adoption, despite the promise of fintech disruptors.

A new dawn for payments in Africa and the world

Progress has been rapid. A new age of payments infrastructure is about to dawn across the Continent.

Africa is not the only place with patchwork, archaic and inefficient cross- and intra-border payments infrastructure.

The continent’s advanced telecoms infrastructure and lack of traditional banking services make it the ideal proving ground for systems that could end up transforming the entire world.

Those that get it right now will gain a critical advantage in this up-and-coming industry.

This article is brought to you by Absa Corporate and Investment Banking.

Get the 10 most-read articles of the week from Bruce Whitfield’s The Money Show, emailed to you every Friday morning:

Subscribe to our Business Wrap Newsletter


Recommended

by NEWSROOM AI
Read More
Checkers app let’s you buy groceries at normal prices – free delivery in an hour

Checkers app let’s you buy groceries at normal prices – free delivery in an hour

The new Sixty60 app gives you access to more than 5000 grocery items from its stores and products from the Checkers LiquorShop.

Earn R4500+ per month by renting out your car to Uber drivers

Earn R4500+ per month by renting out your car to Uber drivers

Flexclub pays you to rent out a car you don’t use to Uber drivers struggling to obtain finance, says cofounder Tinashe Ruzane.

RMB Holdings ends SA’s 'most successful entrepreneurial venture in 40 years'

RMB Holdings ends SA’s 'most successful entrepreneurial venture in 40 years'

RMB Holdings will dole out its shares in FirstRand, South Africa’s largest financial institution, says Chris Logan.

4 things you should never say if you want to get rich

4 things you should never say if you want to get rich

Don’t ever say or, worse, believe any of these wealth-destroying platitudes, implores personal finance expert Warren Ingram.

How to buy your first share (even if you only have R50, or less)

How to buy your first share (even if you only have R50, or less)

Got R50? No? Got R5? Personal finance expert Warren Ingram on how to buy shares with tiny amounts of money.

13 tips for saving hundreds (nay, thousands!) of rands each month

13 tips for saving hundreds (nay, thousands!) of rands each month

The economy is toast. Personal finance expert Warren Ingram shares 13 highly effective tips for making ends meet.

Popular articles
Fitness was a career that chose me - 'Queen Fitnass'

Fitness was a career that chose me - 'Queen Fitnass'

Mapule Ndhlovu opens up about her life journey and how exercise changed not only her body, but her mindset for the better.

[WATCH] Tshwane bystander 'poses' for the camera, has social media laughing

[WATCH] Tshwane bystander 'poses' for the camera, has social media laughing

Khabazela shares tweets and Facebook posts that have gone viral.

Gift of the Givers' Dr Imtiaz Sooliman – angel amongst men – talks about money

Gift of the Givers' Dr Imtiaz Sooliman – angel amongst men – talks about money

"I have no desire for clothes. I have no desire for holidays. I have no desire for outings. All I see is the suffering of people…"