In most of sub-Saharan Africa cash dominates the payment system and only a small percentage of the population enjoy the convenience of online, card-based, and mobile payments. In Kenya, for instance, it is common for consumers to withdraw money from an ATM or mobile money agent, then walk into a supermarket to make payment in cash.
Jabu Basopo, general manager for Southern and East Africa at payments technology company Visa Inc, says there is a need to create awareness among consumers and merchants on the benefits of electronic payments.
“It is important to educate everyone, especially shop owners who have the responsibility of taking cards. In Europe when you go to a cashier the first payment option they offer you is card. Here what we have is the reverse – cash. And we need to change that mindset,” says Basopo.
Although banks in the region have developed their own mobile banking platforms these products are not inter-operable. Visa’s mobile banking solutions do not compete with those offered by banks but simply provide an additional channel for customers to make payments.
“Mobile is not a product, it is a channel. We are enabling the choice of mobile as a payment channel. If you are going to electronify payments you want to make sure that all the possible channels are activated. It is up to the consumer to pull out their card or phone, or go onto the internet to make a transaction,” he explains.
Visa plans to generate 50% of its revenue from markets outside the US by 2015. The company is pushing the adoption of EMV chip cards which offer more security and are harder to counterfeit compared with the traditional magnetic strip cards.
“The whole of Europe has migrated to EMV cards, and they have seen reduction in card fraud,” says Basopo. “The banks have a lot of bulletproof security systems in their own platforms, and we also have safeguards at Visa to prevent fraud. There are ‘risk tools’ embedded in every platform to make sure we address the issues of fraud in card payments.”
Although many banks have adopted the EMV migration process, most consumers have not collected their new chip-enabled payment cards.
“As you know, in most developed economies they would use the postal service as a way of distributing the cards, but in this market that would not be a recommended solution. So the banks are sitting with the cards in their cabinets waiting for customers to come and collect them.”
Each economy is different
Basopo oversees operations in 20 territories and notes that each African country is different. In Ethiopia, for instance, the regulator bars international cards. Visa has been operational in Ethiopia since 2004 working with local banks, but the cards only work within Ethiopia as per the regulator’s requirement.
Earlier this year Visa began piloting the country’s first international debit card.
“Every economy is different and the levels at which they can absorb certain things depends on what you have in place whether it is platforms, systems and skills. So in some economies you have to appreciate that they are still developing these things… whereas others are well advanced,” says Basopo.