Digital Payments in Africa Are Moving Ahead Without Bank Cards, Highlighting the Shift Away from Traditional Financing Methods
Sub-Saharan Africa is witnessing a digital revolution, with mobile-based fintech solutions revolutionizing payment systems, particularly in rural areas. This transformation is driving financial inclusion, enabling millions of previously unbanked adults to access digital financial services [1][2].
According to recent statistics, over 85% of all retail transactions in Africa happen in informal markets [3]. Mobile money services, such as Kenya’s M-Pesa and Nigeria’s Flutterwave, are bridging the gap by providing accessible, affordable, and convenient digital financial services. These services allow users to send, receive, and store money on their phones, driving a massive increase in financial inclusion and transforming local economies [1][2].
In rural areas, where physical bank branches are scarce, mobile money enables users to perform basic and complex financial transactions from their mobile devices. This technology supports everyday payments, remittances, and even access to credit and insurance [1][2].
QR codes, POS machines, and prepaid vouchers play crucial roles in expanding the reach and utility of mobile fintech in Sub-Saharan Africa. QR code stickers, commonly displayed in local shops and markets, allow customers to scan and pay directly from their mobile wallets, helping to reduce reliance on cash in everyday commerce [3].
POS terminals, though still growing in penetration, enable merchants to accept mobile money and card payments, facilitating digital merchant payments. However, digital payments from person to business (P2B) still lag behind person-to-person (P2P) mobile transfers in many countries, reflecting ongoing challenges in shifting informal retail sectors away from cash [3].
Prepaid vouchers help users without access to bank accounts load money onto their mobile wallets or pay for services, bridging financial accessibility gaps. They are particularly valuable in rural areas where cash liquidity and digital connectivity coexist, providing a physical means to access electronic funds [3].
Mobile-first payment systems and vendor networks are also driving growth in Africa's iGaming market. The Africa iGaming market is projected to reach $3.5 billion by 2027 [4]. In rural areas of countries like Tanzania and Zambia, betting vouchers can be bought and wallets topped up via mobile money without the need for a bank or card [4].
Kazang's POS devices, designed for small businesses, allow them to accept card or mobile money payments, offering real-time balance and inventory management [5]. This technology is enabling small businesses to participate in the digital economy, contributing to overall financial inclusion in the region.
In conclusion, mobile fintech solutions built around mobile money accounts combined with innovations like QR codes and POS devices are driving financial inclusion across Sub-Saharan Africa by enabling seamless digital payments even in underserved rural regions. Despite the progress, P2B digital payment adoption remains at an early stage compared to P2P transfers, pointing to opportunities for further growth and regulatory support to integrate digital payments fully into everyday commerce [1][2][3].
References:
[1] World Bank Group. (2020). Sub-Saharan Africa’s digital economy: A bridge to prosperity. [online] Available at: https://www.worldbank.org/en/topic/digitaldevelopment/publication/sub-saharan-africas-digital-economy-a-bridge-to-prosperity
[2] McKinsey & Company. (2019). The rise of Africa’s digital giants. [online] Available at: https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-rise-of-africas-digital-giants
[3] GSMA. (2020). The mobile economy Sub-Saharan Africa 2020. [online] Available at: https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2020/07/The-Mobile-Economy-Sub-Saharan-Africa-2020.pdf
[4] Africa iGaming Report. (2020). Africa iGaming Report 2020. [online] Available at: https://www.africairgamingreport.com/wp-content/uploads/2020/10/Africa-iGaming-Report-2020.pdf
[5] Kazang. (2021). Kazang: The future of small business payments. [online] Available at: https://www.kazang.io/blog/kazang-the-future-of-small-business-payments/
- The growth in Sub-Saharan Africa's digital finance landscape is evident in various sectors, with mobile money services like M-Pesa and Flutterwave revolutionizing sports betting in Tanzania and Zambia, contributing to the projected $3.5 billion Africa iGaming market by 2027.
- In line with this digital revolution, small businesses in the region are also reaping the benefits, as innovations like Kazang's POS devices enable them to participate in the digital economy, offering real-time balance and inventory management.
- Innovations such as QR codes, POS machines, and prepaid vouchers are crucial to mobile fintech's expansion in rural areas, assisting in the seamless digital integration of lifestyle aspects, such as sports betting, and small businesses, driving overarching financial inclusion in Sub-Saharan Africa.
