Mobile payment systems are either payment systems that utilize a mobile network to authorize a transaction or the contactless systems that use a mobile phone in lieu of a credit card. The former is choice of Africans and its growth is expected to continue for the foreseeable future while latter is common in USA and other first world economies where credit cards are common. Mobile money transfer services have hit mainstream consciousness among unbanked African population and since the advent of Kenya’s largest mobile network operator Safaricom M-Pesa service, the space has gained a lot of attention globally and is poised to redefine the way business is done in the entire continent and beyond.Gone are the days when people envisioned a scenario where the mobile money wallet could be used between buyer and seller, where if short on cash, one could electronically transfer money owed for purchase of the services or products. Recently, I was checking on the list of latest mobile based payments solution providers in African and I must admit I was impressed how they are changing the way things are done in the continent. One thing that lets down so many mobile payments activities is failure by continent to migrate from the magnetic strip environment to the Europay, Master card and Visa chip based credit cards infrastructure which can address a chronic problem of counterfeit which is common in most African countries.
If the continent embraces EMV Level One certified it would drive mobile commerce growth as has been the case with mobile payments. EMV Level one certifies means the credit card associations recognize the hardware and if fraud occurs, they will back it, so liability does not lie with the merchant or payment processor. The reader also uses what they landing contacts to read chips, where the eight-pin connector would not come in contact until the card is fully inserted and is certified up to at least 100,000 cycles. When it comes to financial transactions, security and compliance are key concerns for many in Africa. Mobile money service providers should find ways to safeguard their system. According to regional bankers associations in Africa, use of electronic payments over the last ten years has increased at an average annual rate of 23.9%, making it an increasingly attractive business opportunity. Mobile payments are a much-needed boost to growing economies of Africa and will no doubt spur growth for the ever-growing SMEs as has been witnessed in Kenya and South Africa. Mobile phone based payments are complex services that require the collaboration of many stakeholders and I laud the recent announcement by African Union that mobile banking solutions are aligned with its agenda to promote electronic payments, and Africa government’s job creation programmes. With mobile payments growth,I expect Africa to shed The Economist magazine coined tag of “Hopeless continent”.