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The total value of mobile money transactions in emerging markets is expected to exceed $870 billion in 2026; this growth trend is also seen in Sub-Saharan Africa, where mobile payments are expected to grow by more than 60% over the next 5 years. Considered one of important payment trends in emerging markets for 2022, the popularity of mobile payments highlights the importance of local payment methods and could open up the African market to a number of global e-commerce opportunities.
Mobile payments as local payment method (LPM) appeared in the sub-Saharan region in the early 2000s with Safaricom, a Kenyan mobile network operator, offering one of the first mobile payment solutions. The importance of this LPM has only grown with the arrival of new players and new regional countries. While mobile payments were not automatically available in every sub-Saharan country, as some still lacked technical solutions, it has become a widespread trend that continues to appear in more and more African countries.
Frank Breuss, CEO of Nikulipea Fintech company that creates and connects local payment methods to access emerging and fast-growing markets, notes that this payment trend has become popular due to the unique circumstances in which sub-Saharan Africa finds itself.
“More than half of Africa’s population remains without a traditional bank account even today, so solutions such as mobile payments are the most convenient for the region,” says Breuss. “Mobile phones are widely available in the region, making mobile money payments the primary way for Africans to pay for goods and services like groceries, food delivery or taxi rides, or even utility bills. public services”.
Breuss goes on to add that cell phones in Africa are used in a very different way than they are in the United States or Europe; they are often not based on monthly subscription models, but rather balances are supplemented by the purchase of prepaid airtime credits, which can be purchased at thousands of stores or agent-kiosks, even in the most rural areas.
“It allows people, even those who don’t have a bank account or credit card, to buy phone credit not only to make calls, but also to top up their phone to pay local merchants for goods and services – logistically, it is the easiest and most convenient LPM to use Knowing all this, understanding why mobile payments are popular in this region can, in turn, open up more global e-commerce opportunities for merchants international and African buyers, who are looking to shop more globally.
Given that a large portion of Africa’s population has limited access to financial services, the continent is seen as one of the world’s most attractive banking opportunities to grow the existing financial industry and introduce new products to improve banking. financial accessibility. After ignoring the mobile money target market in favor of higher income Africans, traditional African banks are also try to enter telecommunications territory. This decision by local banking institutions indicates that the mobile payment market will continue to grow in the coming years.
While mobile payment penetration varies across sub-Saharan African countries, at the end of 2020, 495 million people were using mobile services, which represent 46% of the region’s population. It is predicted that by 2025, this number will reach 615 million, equivalent to 50% of the region’s population. This shows that local payment methods will remain an important part of e-commerce growth not only in sub-Saharan Africa, but also in fast-growing and emerging markets.