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How to make it easy for Africans to move money
Traditional banking services have struggled to take root, hindered by the vastness of the continent and its unreliable infrastructure, says Absa Corporate and Investment Banking. Making payments over large distances and across borders, where it is possible, is complex and costly.
There are solutions, however, depending on where you are.
Payments companies have been active for some time while an array of companies big and small are eagerly taking advantage of the proliferation of mobile devices and creating new ways of moving money.
Their enthusiasm is well-placed, but there is still some way to go.
(Also, read: "Why Africa is uniquely poised for an electronic payment revolution")
What Africa needs in the years to come
Payment systems – both current and upcoming – are invariably built for larger transactions.
Most of them are focussed on commerce and ill-equipped to deal with microtransactions if they can support them at all.
Yet, microtransactions – the stuff of everyday life – are key parts of the puzzle and must be the central focus of those building future payments infrastructure.
Trade is important but this is about far more than just trade.
More Africans are travelling and working across borders and regions than ever before. They increasingly need a convenient method of making payments for reasons such as paying bills or sending money home.
Removing “friction” from the process
Consumers will adopt payment systems only if they are simple and user-friendly.
The process must involve the fewest possible steps with all technical elements “hidden under the surface”.
Traditional payment services fall short when it comes to transparency, cost and ease of use. Transactions are complicated and involve numerous intermediaries. There are periods where neither the sender nor beneficiary knows where the money is, or who has it.
The time between pressing “send” and the beneficiary having access to the funds must be as short as possible.
Third parties should hold funds for a very short time or, ideally, not at all.
This article is brought to you by Absa Corporate and Investment Banking.
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