Innovative mobile payments technology once again comes from Africa

Parratt said the overbanked are also often under-cashed. He explained how ATMs seldom give R10 notes and how valuable they are for paying for parking in South Africa. You can’t use bank cards to pay car guards as they could not afford to have a point-of-sale device. But now they can, using their mobile phones.

“It costs Standard bank about R10,000 to buy a point-of-sale device and to get it into the field… and those devices wear out after two years, maybe three years… So it is a very capital intensive environment,” he explained.

Oltio’s technology means all that is needed is a data capable phone and the mobile app.

While the ability to turn a mobile phone into a point-of-sale device currently exists with a square card-reader dongle that can be plugged into a phone, it still needs a card to be present. “It requires typically a high-end phone to be deployed and it also requires a distribution capability for the dongles, and many are not certified for PIN,” added Parratt.

The potential for Africa

Africa has a large unbanked population and Oltio’s service caters for the banked. This means it will do well in developed countries and emerging markets such as South Africa and Brazil. However, the transactions solution also has the potential to positively impact payments and small to medium sized enterprises in Africa.

“The big challenge in Africa is there are a lot of cards but there is nowhere to use them,” explained Parratt.

He pointed out that in most African countries, those with bank cards do not generally use them to make direct payments as many services and retailers only take cash. So effectively, cards are used to simply draw money from ATMs because of the lack of point-of-sale devices in most African countries.

But if phones become point-of-sale devices, merchants could start using them for payments. It also reduces the amount of cash consumers and informal retailers carry.

“For example, Coca-Cola will not deliver Coke to a spaza shop unless they have been pre-paid because with a cash delivery, trucks were being robbed of the cash just after being paid,” said Parratt.

The future of payments will be based on the payD technology, said Parratt, adding that Oltio will make a number of big announcements in the coming months in connection to this. The company is a joint venture between the Standard Bank Group, which operates in 18 African countries, and MTN Group which operates in 21 countries. Oltio has also recently partnered with Mastercard.