How Africa is banking on payments innovation to create digital economies

Africa is a hotbed of innovation, particularly in the digital and payment space. Every day, this is proven through the introduction of new and better solutions that truly make a difference in the lives of the people they were created to help. It is this that drives Mastercard: the desire to make a positive impact on both businesses and their customers through efficient and easy-to-use solutions and financial tools.

The ability to create these solutions can only be achieved by keeping a finger on the pulse of trends that actually affect people’s day-to-day lives – and in Africa, that is undoubtedly digital and mobile. Mobile phone penetration, according to Ericsson’s latest Sub-Saharan Africa Mobility Report, is predicted to pass the 100 percent as early as 2021 – illustrating the possibilities that this technology has in creating solutions that will foster economic involvement and growth.

Investing in conceptualising and implementing mobile and digital payment systems is therefore imperative to drive Africa and its people forward. It is precisely for this reason that Mastercard devotes extensive resources and time to crafting tangible systems and tools that enable all of the continent’s citizens to participate in the formal economy, as well as focus on building sustainable partnerships that meet these goals. The company already has several successful examples of solutions that have been introduced in various markets across the continent as a result of strong relationships and collaboration.

A particular highlight in this space in the last year has been the roll-out of Masterpass QR, which was first introduced to the African continent in Nigeria in August 2016 and has since also been launched in Kenya, Rwanda, Tanzania, Uganda and Ghana with partner Ecobank. Altogether, the solution will be rolled out in 33 markets, all of which will benefit from the mobile-driven, interoperable Person-to-Merchant (P2M) payment solution’s ability to bring businesses and citizens into the financial mainstream.

Masterpass QR allows merchants, particularly of micro, small and medium enterprises (MSMEs), to accept secure payments via mobile app. The solution removes the historic challenges of acceptance of electronic payments as well as cutting down the high cost of installing payment infrastructure such as point-of-sale devices. As a direct result of enabling acceptance for merchants, Masterpass QR facilitates operational efficiencies for MSMEs, which are widely recognised as the engines of development in emerging market economies. These enterprises, according to the World Bank, create four out of five new jobs in these economies.

Not only is the solution making a meaningful difference to merchants in the MSME segment, it is also impacting on consumers in general. Customers of MSMEs are provided the security of being able to pay for online and in-store purchases by scanning the Quick Response (QR) code displayed at the checkout on their smartphones, or by entering a merchant identifier into their feature phones – anywhere that Masterpass QR is accepted worldwide. This opens up significant opportunities to transact that were previously withheld from these citizens, therefore driving financial inclusion in a real and measurable way.

As one of the single largest implementations of a digital payment solution in Africa, it shows the sheer power that these kinds of financial tools can have on changing lives – it is predicted that the solution will reach 100 million customers by 2020, helping bring many of them into the formal economic fold for the first time in their lives.

Mobile payments are increasingly recognised for being what they are: the foundation of financial inclusion. By working to introduce more solutions that embrace the disruptive power of technology, in particular mobile, companies can ensure that more and more businesses and their customers can enjoy life-changing financial freedom by being able to accept and make payments seamlessly and safely.

Because Mastercard recognises the power of collective action, it aims to collaborate with like-minded partners – and these partners are not just found in the private sector. Governments play a critical role in driving the financial inclusion of their citizens, and Mastercard has formed a number of robust relationships with public sector partners across Africa that have driven financial inclusion on a large scale.

One such example is the Memorandum of Understanding signed with the government of Rwanda in May last year to promote the move to a cashless economy by introducing initiatives such as the digitisation of school fees and national healthcare claim payments and an online payment gateway for Rwanda Online – all working towards a common mobile banking platform and the effective management of spending activities across borders. These initiatives form a critical part of the government’s strategy to drive 90 percent financial inclusion in the country by 2020.

Effective partnerships, across the public and private sectors, help the creation and introduction of solutions that overcome the barrier that cash presents in financial inclusion. It is only through dedicated collaboration that this obstacle can be overcome, and to show that Mastercard is serious about changing the daily realities that many Africans face as a result of being financially excluded, the company will continue to actively seek out and work with partners to introduce payment tools and solutions that enable real and measurable economic involvement.

(Chris Bwakira is a VP and Area Business Head at Mastercard).

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