Africa lags behind in e-commerce transactions
American research company International Data Corporation predicts worldwide mobile payments will account for $1 trillion in value in 2017, up 124 per cent from the less than $500 million expected this year.According to the latest data, Asia Pacific markets f will contribute to this growth greatly as mobile commerce or mCommerce transactions with remote payments take off across the region.Driven by a high number of initiatives and diverse mCommerce maturity level, Asia Pacific is expected to lead the world in mobile payment or mPayments developments while African content will lag behind all regions thanks to lack of infrastructure and investment in the business.IDC said that the strongest growth for mPayments will be driven in part by rising levels of mCommerce as emerging countries come online for the first time and witness an Internet boom through smartphones.The reports notes that the limited state of credit and debit card adoption in Africa will force potential mPayments behaviour to shift to using bank account linked mobile wallets in countries like Kenya,Tanzania Nigeria and South Africa.IDC also notes that smartphone adoption has grown much more rapidly than general banking and card adoption in the Sub Saharan Africa region.A researcher familiar with the report informed your blogger that when she look across the region, it is a duality between the mature African markets like South Africa, Mauritius, Egypt, and Kenya versus the emerging African economies like Tanzania, Uganda and DR Congo. The mature markets exhibit strong levels of banking and card adoption and will tread a similar path as mature Western economies have for mobile payments, with a focus on proximity solutions based on Near Field Communications.
These will be fertile markets for solutions like Apple Pay and Android Pay.However, Africa’s emerging markets, which account for most of Africa’s population, are unlikely to follow this path. They will more likely leverage semi-closed wallets, where consumers “top-up” their mobile wallets much like they would a prepaid mobile account by linking their bank accounts.According to a senior analyst at Boston Consulting Group whom I sough views on IDC report,said that the markets of Africa are highly diverse and each displays significantly different characteristics.The mature African economies will remain card payment leaders and view mobile payments as an efficiency driver with proximity solutions seeking to displace the need for physical swiping of cards. The remaining African markets will look at mobile payments as a GDP booster and to address financial inclusion imperatives. Mobile payments in these markets will jump start mCommerce much like M-Pesa has in Kenya and Tanzania.The analyst also pointed that there were several opportunities for sustained growth in mobile payments across East Africa excluding Kenya which is reaching saturation point soon. For example, NFC-based proximity solutions such as Apple Pay and Android Pay will only take hold in a few mature African markets as their adoption is constrained by the low penetration of NFC in smartphones and readers in emerging Africa. Mobile wallets, especially those based on semi-closed platforms, will drive much of the growth in emerging African markets. Then, there will also be a significant opportunity for mobile point of sale device and solution vendors seeking to address gaps in card present payment scenarios in physical locations, which require payments to be verified either by NFC or even quick response codes.