Will Mobile Surpass Cards As The Dominant Payment Form In Africa? — Osahon Akpata

4 min readOct 3, 2022

Amidst a backdrop of global economic challenges stemming from the pandemic and the war in Ukraine, payments are expected to increase by 7%, according to a recent McKinsey & Company report. In Africa revenue growth is expected to be almost three times faster, with financial inclusion quickly expanding, primarily driven by the adoption of mobile money and several innovative payment solutions introduced by banks, telcos, and Fintech firms. While cash remains king and its reign is expected to continue for years to come, the rapid growth in electronic payments is challenging that notion.

The opportunities in the payments ecosystem on the continent are promising. For example, Sub-Saharan Africa dominates the mobile money market, responsible for 70% of the $1 trillion mobile money transactions processed globally last year. The ubiquity of mobile devices has naturally led to the proliferation of mobile payment applications, and the channel is fast becoming a leading payment form. However, mobile payments are not without challenges — the essential being interoperability. Consumers can use a mobile banking application to transfer funds to any other bank account domestically. However, this is not always the case for transfers between mobile money wallets, where this interchange is still in the early stages of development.

Cards are easy to use and offer advantages to consumers and the payments ecosystem. With regulatory pricing pressures in select markets and supply chain challenges, could mobile-based payments surpass cards as a leading electronic payment channel?

Offline and In-Store Payments

Cards are convenient for in-store payments because one can obtain a paper receipt from the POS terminal to make reconciliation easy, which is usually integrated into the cash register. Most large and medium-sized merchants are accustomed to accepting card payments. However, a POS terminal or card reader is not affordable for micro and small merchants as most struggle with merchant service charges. Additionally, with payment settlement typically completed a day later, micro and small merchants are constrained by daily funding needs for inventory.

Mobile payments are becoming more attractive for consumers and merchants. For digital natives, using a phone as a payment instrument is quite natural. Payments are generally instant, and merchants do not have to get a POS or pay fees to collect funds. Given that these are push payments (initiated by a consumer), the risk of rejection is low. However, some merchants still struggle with payment confirmation and reconciliation. In Nigeria, Fintechs such as Traction Apps and Collect Africa are closing the gap by offering transaction confirmation, settlement, and reconciliation services. By leveraging telco infrastructure and local switches, mobile payments can avoid expensive rails, a key advantage for scale.

Online Payments and E-Commerce

E-commerce is booming across the world, accelerated by the COVID-19 pandemic. In Africa, e-commerce revenues were$28 billion in 2021 and are expected to rise to over $46 billion by 2025. Today, a merchant in Nairobi, Kenya, can easily accept card payments with seamless payment validation and settlement services offered via payment gateways. There are established processes to handle issues such as chargebacks and dispute resolution. Cards are also convenient for recurring charges such as subscriptions, which have become popular with streaming giants like Apple Music, Spotify, and Netflix rolling out their services across Africa. On the other hand, the risk of repudiation is higher for online transactions. This is included in online merchant acquiring fees, which can become prohibitive for merchants and consumers.

Most online merchants do not accept mobile payments yet. However, this is gradually changing as large mobile money operators, such as Safaricom’s MPESA, are now available on streaming and other e-commerce websites. Given the much lower risk of repudiation with mobile push payments such as Quick Response (QR) codes and bank transfers, costs are much lower than cards. However, the lack of interoperability and international acceptance limit mobile payments for eCommerce.

Cross-Border Payments

A significant advantage international cards have is acceptance across the globe. With rails that reach virtually every country, cross-border payments are more manageable with cards where local regulation is supportive. A young lady in Dakar paying for an evening gown on a French couture website with an international card has a frictionless experience. Several Fintechs provide online merchant payments services to African merchants who want to accept cross-border payments.

Acceptance of mobile money or account-to-account payments via a mobile channel for cross-border payments is still nascent. Payments and settlements can be instant. For example, Ecobank’s pan-African switch enables instant cross-border payments across its 33-country network on the continent. The emergence of the Pan African Payments and Settlement System (PAPSS), which seeks to remove the burden of a third currency in African trade, has great potential to accelerate intra-African payments via mobile channels. While multi-currency settlement and interoperability between mobile payments remain a challenge, resolution is on the horizon. Blockchain technology promises to significantly impact cross-border mobile payments by reducing transaction costs and improving security.


African consumers are rapidly relying on their mobile devices for payments. The growth in digital wallets has led to the issuance of cards linked to mobile wallets. Legacy payment infrastructure developed by international card schemes enables seamless transactions, creating significant value for the ecosystem.

In June 2022, pan African mobile money hub MFS Africa announced the acquisition of Global Technology Partners, a prepaid card processor. Mobile money operators and card schemes will continue collaborating to offer customers a frictionless payment experience. Blockchain and other emerging technology could radically change the state of play. Cards will remain relevant in payments in Africa; however, mobile payments are undeniably on the fastest rise.




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