Why mobile payments are doing well in Africa

April 26, 2017

Africa now has one of the fastest developing mobile payment market. For banks and other financial organisations, competition from start-ups and mobile apps is disrupting the status quo payments landscape. Existing players face more challenges and many financial institutions, retailers and processors are uncertain about how to best prepare for and prosper from this disruption. The Africa payments industry is at an important inflection point where businesses need the best strategy and execution to meet the challenges ahead. Organisations must turn disruptive trends and technologies into a business advantage. They must embrace new technologies to create opportunities. When it comes to how consumers will transact, pay and interact with retailers and banks in the future, the key to success is how technologies add value while offering greater simplicity. Mobile payment is making inroads as shopping apps are gaining popularity. Most of the big traditional retailers are unveiling e-commerce plans of their own.This growth is fuelled by affordable smartphones, a massive young and tech-savvy population and efforts by governments and telco operators to expand and improve high-speed wireless networks.  The future has never been clearer. It’s only a matter of time before mobile payment goes mainstream. The opportunities offered by real time payments will have a lasting impact on Africa in the coming years. Many consumers believe payments are already processed in real time without understanding the complexity of what happens after they swipe their cards or click to purchase.

Africans are already seeing financial organisations beginning to explore the possibilities offered by biometrics and its an area which will continue to drive new methods for consumers to interact with financial organisations and retailers.Biometric technology is poised to bring greater security to current payments processes, offering consumers the opportunity to choose how they prefer to verify their identity and keeping users engaged in the security process, without complicating the overall experience.On the other hand mobile devices have proven to be a key disruptor in how payments are initiated. Africans have embraced mobile commerce. Of the nearly 200 million Africans with a smartphone, more than a quarter had downloaded a banking and finance app. Because of this, all of Africa’s banks and many of its major retailers are unveiling new mobile solutions, aimed at simplifying payments and integrating additional services.Mobile solutions allow financial institutions the opportunity to diversify their payment options and create a strong, more personalised link to loyalty. Also, for telco operators, they are engaging with retail merchants and partners to help strengthen the overall service ecosystem to provide better end user experiences for consumers. Additionally, the design and development of payments services has also be integrated with other emerging technologies and competencies to offer differentiation to target audiences.Loyalty is great, but to really retain customers in today’s Africa competitive space, shopping experience is equally important.

To African consumers, simplicity and convenience is paramount. Not only do they expect everything quickly, they also lose their patience faster. For retailers, mobile payment offers the opportunity to segment and target consumers much more effectively with highly personalised offers and incentives. Discounts and offers need to be integrated into mobile payment. Mobile payment also offers a chance for small retailers to move into a new era of retailing. Freed from high transaction fees and with new ways to connect with consumers, small retailers are now embarking on the kind of personalisation and targeting that is usually the privilege of larger players. With e-commerce here to stay, there is plenty of potential for retail businesses to leverage research intelligence to adequately design and develop strategies to target this group of consumers. Essentially, the key to success is to fully understand shopper behaviour and be led by what consumers ultimately want, without being blinded by what the technology can do. Disruption continues to evolve on multiple fronts and in unforeseen directions in Africa and we’ll continue to see new technologies that compliment and run alongside each other in the payments space. The simultaneous evolution will foster disruption and development, as it means that no single player will own the entire payments ecosystem. Africans will continue to see a variety of players looking to claim a piece of the pie, which will add value and drive simplicity, convenience and security. What’s becoming clear is that innovation in Africa’s payment space is not just about payments. It’s about forging a deeper connection with consumers, and utilising data to drive continued innovation, trust, convenience and security. As mobile payments continue to grow, African businesses in various sectors such as financial services, cybersecurity and telco stand to gain and can evolve to support the changing landscape.

Contador Harrison