Online and mobile payments are taking off in Africa as a combination of improved internet access, advanced financial systems and widespread mobile penetration help spur demand for services.
However, the ability to pay and accept payments on the continent are not without their challenges, principally around risk and settlement.
“For the last decade, the ability to pay online, north of South Africa, has been difficult for a number of reasons – but it’s rapidly improving and that creates significant opportunities,” says Peter Stenslunde, Wirecard South Africa Executive Director.
He says e-commerce and online credit card payments are high-growth industries in Africa and mobile wallet technology and mobile money even more so.
“Many banks in Africa are new to e-commerce and they don’t have the experience or the necessary systems in place to handle risk and settlement, for example.”
“In many cases the technology they use is reaching the end of its life or they simply don’t have it. For these reasons banks are happy to outsource services to fintech companies with a global acquiring platform. This gives them access to new markets, merchants, customers and opportunities. The digitised payment platforms we employ are designed to evolve rapidly,” he says.
Stenslunde says in Africa the travel and mobility sector in particular, as well as digital and consumer goods are all good candidates for new fintech solutions.
“The appetite for cross-border business in Africa is strong and growing. More people are travelling to Africa and within Africa, so the likes of hotel chains and airlines require payment systems flexible and secure enough to deal with payments. In the case of hotel chains, for instance, they might have 20 hotels in 20 different countries and need a single platform to settle credit card and online payments either locally or internationally. We solve that for them.”
“In terms of airlines, we hold a global acquiring licence from card associations. A normal third-party processor would have to have in-country licences for each country but we can process and settle their international and domestic card payments on a single platform without extra red tape. We are integrated into all the major travel platforms, such as Amadeus and combining this with our extensive real-time risk platform, we are able to provide a comprehensive, secure and one-stop solution for African airlines.”
Stenslunde says mobile wallets are another huge growth opportunity and that technology developed in Africa far supersedes that in other parts of the world.
“A mobile wallet allows you to store, send and receive money from a mobile phone. It is usually linked to an electronic wallet which is essentially an electronic bank account that your phone uses to transfer value to merchants for the payment of goods. You can then use your phone to buy value-added services like electricity and pay various bills at those merchants who accept mobile wallet payments. It is a way for people who aren’t traditionally banked with a bank account to be financially included by making payments on their mobile phones rather than with cash. It’s a huge industry that’s growing because there is so much cash sitting around in people’s wallets in Africa.”
A recent World Economic Forum report on Global Trade says in sub-Saharan Africa, 12% of adults (64 million adults) have mobile money accounts (compared to just 2% worldwide), and 45% of them only have a mobile money account.
“As the newly-banked population becomes connected to mobile payments, it’ll be much easier for them to participate in global trade, either as consumers or businesses.”
Wirecard has a good presence in South Africa with its issuing business – issuing prepaid cards.
“These prepaid cards are like private debit cards and organisations can brand them and use them to do anything from paying employees to dividend payments. For instance, our SAA programme is used to pay pilots their daily per diem allowance. Money is loaded onto the cards by the merchant and their customers can use these cards at ATMs, over the internet or on point of sale (POS) machines.”
Stenslunde says Wirecard is presently concentrating on growth in Southern African Development Community (SADC) countries initially and has serious intentions to pursue an aggressive growth path further into east and west Africa.
Last year the company acquired MyGate, a South African fintech firm that enables merchants across Africa to accept a wide range of different e-commerce payment options, particularly online card payments, thereby helping them to serve millions of African consumers.
“We expect to make further acquisitions in South Africa, as well as eastern Africa and western Africa in the next six to 12 months,” concludes Stenslunde.