Africa’s Digital Future Beyond Mobile Money

It seems like an exciting time for PayTech — payments technology — in Africa.

Across the continent, central banks and regulators are joining forces with the private sector to deliver a more streamlined, increasingly digitized payment ecosystem to meet the growing consumer preference for faster, convenient and frictionless electronic payment options.

Related news: Bank of Ghana Unveils GhanaPay Mobile Wallet

Also related: PayU Boosts African Footprint With Ghana, New BNPL, QR Products

Just this month, the Central Bank of Ghana launched GhanaPay, a mobile wallet designed for banks, savings and loans companies, and rural and community banks. The announcement comes in the same month as payments service provider PayU announced its expansion into the Ghanaian market, coinciding with the company’s growing presence in Africa.

In an interview with PYMNTS, PayU South Africa CEO Karen Nadasen, spoke about the growth potential of emerging markets in Africa as well as the challenges and opportunities that come with operating on the continent.

For Nadasen, PayU’s focus on emerging markets is directly connected to the company’s vision for financial inclusivity, and helping to provide diverse payment methods is key to bringing millions of Africans excluded from traditional banking into the financial fold.

To do this effectively, Nadasen stressed the need for the right partnerships. “We do a lot of due diligence on the organizations that we partner with because the responsibility in payments lies with all the stakeholders in the national payment system,” she said.

As is the case elsewhere in Africa, in Ghana, mobile networks are an important feature of the country’s payment landscape, due to the growing popularity of USSD-based mobile money transactions. As such, finding the right network partners while complying with the country’s regulation has been essential in facilitating PayU’s move into the Ghanaian market.

And because the company has established partnerships with local network providers, in addition to debit and credit cards, PayU’s customers in Ghana will be able to use mobile money payment methods, including MTN MoMo, Vodafone Cash, and Tigo Pesa.

Now, with the launch of GhanaPay, citizens of the country are set to benefit from even more cooperation within the sector. As mobile network providers, banks and FinTechs like PayU are increasingly able to leverage a shared infrastructure, businesses and consumers can move money in a more open, convenient and frictionless system.

Africa Catches BNPL Wave

The buy now, pay later (BNPL) market has exploded in recent years, accelerating the transformation in consumer payments through point of sale (PoS) financing.

According to Nadasen, PayU is also working with local players in other parts of Africa to offer that service through a partnership with South African BNPL firm Payflex, enabling users of the PayU platform in the country to spread the cost of purchases over six weeks at a zero percent interest rate.

Learn more: BNPL Catches on With African Shoppers

Citing the case of people who earn weekly wages, Nadasen added that BNPL is helping Africans make purchases that they would have struggled to afford previously: “deferred payment options is driving more inclusivity in Africa, specifically, in relation to how people earn and spend.”

The payment provider can offer BNPL and USSD payment options, building relationships with key local stakeholders, a point that Nadasen was keen to emphasize: “We’re trying to be locally aware and provide payment methods that people will actually use and benefit from. We don’t want to just take a global solution and implement it locally. We had to hire locally, we had to partner locally, we had to comply with [local] regulations.”

Cross-Border Payments

With over 2,000 languages, myriad different currencies, multiple payment systems to navigate, and a patchwork of regulatory frameworks, operating in the African region can be an uphill battle.

Watch interview with PAPSS Deputy CEO: Instant Payments Set to Boost Intra-African Trade by $5B Annually

However, Nadasen pointed to initiatives by governments and regional alliances such as the African Continental Free Trade Area (AfCFTA) and cross-border infrastructure projects like the Pan-African Payment and Settlement System (PAPSS), as promising new opportunities for pan-African collaboration and exchange.

 See also: From Startups to Institutions: Solving X-Border Challenges in Africa to Facilitate Remittance Flows

She added that innovative technologies like blockchain and cryptocurrency, which have seen a massive uptake in the region, will play an important role in driving the growth of cross-border payments across the continent.

For example, global initiatives like Project Dunbar, which the South African Reserve Bank is involved in, are exploring how central bank digital currencies (CBDCs) can be used to make currency exchange faster and cheaper.

Further reading: Beyond Project Dunbar’s Shared Platform, Unknowns Loom for Central Banks, CBDCs

Finally, Nadasen said that despite being a global leader in the mobile money space, there is still room for digital innovation in Africa, pointing to high data costs and poor internet infrastructure as issues that need to be tackled to drive further growth and development across the region.

“Some countries are lagging behind, and significant investment will still need to be made there, but for now, mobile money growth has been significant. In fact, it’s the [highest] in the world.”

You might also like: Blockchain Technology Could Solve Many Challenges in Africa’s Payments Space

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