High-Tech vs Low-Tech - Providing a Digital Payments Solution for Africa

Africa needs a new payments solution that is digital from start to finish, according to Andrew Torre, Visa’s President of Sub-Saharan Africa.

Speaking at the Seamless Africa payments, ecommerce, and retail conference held in Cape Town last week, Torre highlighted the need for a new payment solution in Africa, and how mobile will be key to that solution.

According to Torre, 95% of transaction in Africa are still cash based, and 75% of people in Africa do not have a bank account. By 2020 however 90% of people will have a mobile phone with almost 60% having smartphones.

The new payments solution for Africa however can’t just be another mobile wallet. While mobile money transfer services like Mpesa have been very successful in many parts of Africa, they are still very limited, as they are generally closed looped systems that only provide a partial solution.

Torre also stressed that any new solution must also be as easy to use as cash. With such a high dependence on cash any digital solution will struggle to displace it. There is generally only one chance to get it right before people default back to what is familiar. A good user experience, and a base level of trust in the new solution is therefore essential.

One of the main problems for existing digital payments systems in Africa is the lack of infrastructure. Traditional payment terminals are high-tech pieces of machinery and need a reliable power supply and internet connection in order to process a payment. The card that is used to initiate the payment on the other hand is comparatively low tech. it has never seen high penetration in Africa however, because of the problems with acceptance.

Visa has therefore developed a new payments solution that flips this around. Consumers are now walking around with increasingly powerful and high-tech mobile phones in their pockets. By leveraging the power of this technology, it is possible to make payments acceptance comparatively low-tech.

Visa’s new solution, mVisa has done this through the use of simple QR codes. mVisa enables consumers to pay merchants by scanning a QR code with their smartphone (or by entering a merchant number into a feature phone). The QR code can be in the form of a static printout or a dynamic display generated on the merchant’s mobile device. This allows merchants of all sizes to accept electronic payments, even if they do not have the infrastructure needed to run a traditional payment terminal.

With mVisa, consumers can directly link to their existing bank accounts and conduct both, person-to-merchant (P2M), and person-to-person (P2P) payments. This enables both in store payments as well as functions such as remittances, and cross border payments.