Africa is home to several mobile payment platforms and services like M-Pesa, yuCash, Orange Money, eTranzact and EcoCash, among several others, which have been major drivers of financial inclusion in the continent.
South Africa-based Vodacom Group Ltd. (VDMCY) is betting big on mobile banking in sub-Saharan Africa. It recently announced its shareholders’ approval for a 35% stake in Kenya’s Safaricom from its parent Vodafone Group Plc (VOD).
At its annual general meeting on July 18, Vodacom’s Chief Executive Officer Shameel Joosub was reported as saying “We will use Safaricom to enter other markets where neither Vodacom nor Safaricom are.”
Joosub also said that the stake into the financial services module would help Vodacom enter other countries without requiring a voice license.
Innovative solutions being offered
Seeing the phenomenal growth of the industry, a lot of global players are now attempting to invest in it. Offerings are not limited to mobile payment or banking products; they have spread to facilitating remittances, complementing card payments, and supplanting cash altogether.
China’s Huawei announced a partnership with United Kingdom-based money transfer service provider WorldRemit on July 11. The alliance will facilitate remittances from African expatriates via Huawei’s mobile money service platform.
Global card payments leader Visa (V) – which commands half of the global credit card market share by purchase volume and 70% of the global debit card market volume – has not been very successful with its card payment services in Africa.
Visa East Africa General Manager Sunny Walia told Standard Digital that in Kenya, over 145,000 outlets accept Visa cards. And even though over 10 million citizens carry debit and credit cards, only a tenth of them use plastic money.
In light of this low usage, the company has launched mVisa – a mobile payment service – which will make the company compete directly with M-Pesa, Airtel Money, and Equitel, among others.
The service, made available in Kenya, will allow users to make person to person transfers worth 250,000 shillings per day with a per transaction limit of 100,000 shillings. This is much higher than other services which typically offer a daily transaction limit of 140,000 shillings while a single transaction is capped at 70,000 shillings.
Apart from global payment systems and phone companies, there are home-grown players that are redefining the mobile payments landscape.
Zambia-based Zoona was founded in 2009 by the Magrath brothers. Unlike most other companies, Zoona is neither owned by a bank nor by a telecommunications company; it’s more of a third-party service provider. The company competes with bigger firms in the space by making its services available at important places and retaining customers due to its reliability.
The Economist reported that the company raised $15 million from investors in 2016, is already present in Malawi and Mozambique, and its chief Mike Quinn aims to attain 1 billion customers.
Meanwhile, Verve International, in partnership with a number of Nigerian banks and mobile money operators, has created Paycode, an infrastructure which allows people to withdraw money at ATMs and Point of Sale (PoS) merchants and make payments without using cards.
This service, once available to customers, will eliminate the need of a physical card in order to make payments or get cash.
Thus, we can see how the mobile money industry is changing the landscape of payments and banking in sub-Saharan Africa. But do these developments have any impact on equity investments in the region? Let’s assess in the next article.