It is 11 years since the first mobile payment service was launched in Africa, and it is now transforming economies across the continent. However, in the first five years or so, it was a solution in search of problems, with a scattering of case studies showing how it could make a difference.
Most people associate mobile payments with M-PESA in Kenya, but it was Zambia that really got the ball rolling, when Celpay was launched there by Fundamo, a South African payment technology company now owned by Visa. Celpay was most famous for one thing: it allowed SAB truck drivers to receive payment for their beer deliveries directly on their phones.
That was great as case studies go, but it didn’t fire up the rest of the continent. When M-PESA was launched in Kenya in 2007, it was also without expectations for a market-shifting service. It was originally conceived as a micro-financing offering. The banking regulator allowed it to be piloted without formal approval. When the pilot revealed the service’s potential for money-transfer, the first foot was placed on the financial racetrack.
Tragically, it was Kenya’s post-election violence in early 2008 that got M-PESA firmly on track. Thousands of people were displaced or prevented from moving out of their home districts, and M-PESA became the lifesaver that allowed friends, families and employers to get money to those who had no other access.
This was the catalyst, and within two years, Kenya had more than 10-million users of this mobile money service. The M-PESA platform was rolled out across Africa, but tended to flop in most countries, as the specific needs changed with every border change.
Today, the time for experimentation is over, and numerous success stories are emerging that do not depend on one specific platform. According to a new report by World Wide Worx, The Digital Savannah: Africa’s e-commerce promise, “the differences in preferences, cultural tendencies and priorities are a hallmark of the e-commerce landscape”. The report, commissioned by Amadeus, the technology solutions provider for the travel industry, reveals that e-commerce is growing in Africa, but not in exactly the same mould as developed economies.
It’s obvious that infrastructure and capacity constraints would change the picture; not so obvious that the concept would develop its own personality that speaks to the way Africans wish to purchase goods and services.
The mobile device is core to this personality. As the report puts it, “lacking conventional online access, millions of Africans have turned to their phones to take advantage of increasingly sophisticated mobile payment and banking services”.
The result is that, in 40 African countries, there are now at least two mobile payment providers per country.
And no less than five distinct forms of mobile commerce are in use: Mobile at the point of sale, using mobile wallets to transfer funds, like the FNB e-wallet; Mobile as the point of sale, where the phone becomes a cash register using an add-on device like Absa’s pebble; Mobile payment platforms like M-PESA, where money is sent using a menu on any phone; Direct carrier billing, where the payment charged to the cellphone bill; and Closed loop mobile payments, where merchants use their own proprietary mobile wallet.
This doesn’t mean millions are shopping for retail goods on their phones yet, but the report reveals a growing trend towards ticket purchases on phones. Here, Kenya was indeed first: a partnership between Kenya Airways and M-PESA resulted in the world’s first air tickets being sold via a mobile payment service.
— Arthur Goldstuck heads up World Wide Worx (www.worldwideworx.com) and is editor-in-chief of Gadget. He is a consulting editor to MarkLives and our media tech columnist. Follow him on Twitter on @art2gee. Reprinted from Gadget.