Bulent Ozayaz recently posted on the VeriFone blog his outlook for payments in Africa. He had the following to say on the topic:
This year developing markets such as Africa will outpace growth in developed markets as consumers across the continent continue to embrace non-cash ways to pay.
While it’s easy to get excited about market growth, forecasts must be tempered with realistic expectations – particularly when setting our operational goals. With that in mind, here are some “outlooks” for the coming year with regards to payments in Africa.
Developing markets may be growing at a faster rate, but still have a relatively smaller base. It is unlikely that volumes in Africa will reach the volumes seen in the more mature markets of Europe anytime soon. Based on a hypothetical and perpetual 20% CAGR for developing markets and 5% for developed markets, it would take at least ten years for volumes in even the most advanced developing markets to overtake those of the developed markets.
Standardization will help
To help speed up development, many believe the emerging African market would benefit from more standardization and greater transparency across the payment chain. We can expect continued emphasis on this as banks and legislators try to smooth the path for cross border payments, which is crucial given the movement of people across primary trading routes.
Partnerships critical to success
Partnerships remain vital for the region particularly between banks, acquirers, vendors and service providers. The prime focus of these will be to enable the market providing card issuance, digital acceptance and alternative e-payments in order to extend e- payments to a greater proportion of the disenfranchised population and – from a government perspective – to reduce fraud and money laundering.
Mobile’s payment potential is huge
There will be some development of e-commerce but with computer ownership and internet access still relatively limited across the region, this will fall short of the progress we have seen in South Africa and the Middle East.
Conversely, Africa’s mobile phone adoption curve has been impressive. In a little over a decade, the continent has become the world’s second most connected region by mobile subscriptions, has witnessed the fastest growth in mobile subscribers in the world and is on track to hit one billion mobile subscriptions by 2015, according to a 2011 report by Informa Telecoms.
In this environment, mobile payments will continue to rise, fueled by Mobile Network Operator (MNO) investments as they build on existing success and continue to partner with banks to launch alternative payments that help them exploit their mobile networks and boost airtime revenues. However the volumes achieved by these may not be as high as industry analysts predict. Africa may also see new exploitation of prepaid cards as digital payments is embraced by new vertical markets such as transport, healthcare and government benefit schemes.
All in all, I predict an exciting time ahead for payments in the region. We will see VeriFone customers reap the rewards of our extensive regional partner network and our ongoing investment in commerce-enabling technology, including flexible connectivity options, contactless, biometrics and mobile wallets.