In recent years, Africa has become a hotbed for digital payments. Digital payments have helped promote financial inclusion and facilitate economic growth. It has now become an everyday tool for improving the availability of financial services in environments with low financial resources.
The rise in the use of digital payment platforms can be attributed to a rise in the penetration of mobile phones into the African market. Many African countries have also integrated digital payments into their payment infrastructure and have begun to reap the economic benefits. For instance,in 2020 mobile wallet transactions in Kenya were equivalent to 87% of the country’s GDP. On the other hand, in Ghana, it was equivalent to 82%.
Although significant progress has been made regarding Africa’s digital payment infrastructure, it continues to face some challenges. There remains an issue of failed transactions and the cumbersome nature of transferring money between individuals and businesses across African countries. Fortunately, some companies in Africa have taken the challenge upon themselves to build truly reliable payment products and infrastructure that can solve some of the biggest challenges facing Africa’s financial services space. This can be seen in Zone and Cellulant’s blockchain technology, designed to solve challenges like cross-border payments, chargeback issues, and payment reliability issues, to name a few.
This article will examine companies pioneering innovation in each of the four African regions: East, West, South, and North. These companies are Cellulant (East), Zone (West), PayFast (South), and Paymob (North).
Introduction to What a Payment Infrastructure Platform Does
Payment infrastructure refers to the underlying systems, processes, and technologies that facilitate and enable payments for financial services providers. Payment infrastructures are not to be mistaken for payment gateways, platforms, or processors, as there are significant distinctions between each of them.
Payment processors are companies that manage and handle certain aspects of card transactions on behalf of card issuers and acquirers, such as transaction authentication and authorization, while payment gateways are the technologies that allow merchants to accept payments from their customers online or from within mobile apps. They encrypt sensitive information to ensure that data passes securely between the customer and the merchant, as well as between the merchant and card schemes like Visa and Mastercard.
The technology involved in payment gateways has evolved significantly over the years. In its early inception, credit and debit cards would be accepted by magnetic strips with a required paper signature from the customer. Since then, payment gateways have continued to evolve to meet ever-increasing customer demands. Its later iteration did away with the need for the customer’s paper signature. It replaced it with a Personal Identification Number (PIN) inserted into a PoS terminal or online payment gateway interface. Customers can now make contactless purchases with their cards or even their phones through software like Apple Pay.
Payment infrastructure is like the unseen network that makes these payments happen efficiently, just like the road infrastructure keeps traffic moving. Cars (payments) can move quickly and easily from one place (payer) to another (payee) through the infrastructure.
Introduction to the Importance of Digital Payments in Africa
For many Africans, digital payments have become an integral part of their day-to-day lives. The integration of digital payments has allowed African nations to grow their economies and enhance financial inclusion. We can already observe the effects of digital payments in countries like Nigeria, Somalia, Kenya, and Ghana.
Digital payments have helped grow economies by reducing the heavy reliance on physical cash. They reduce transaction costs by enabling cheaper and faster transactions, allowing businesses to receive payments easily, reduce their operating costs, and grow.
Traditional financial services are typically unavailable to many Africans due to barriers like distance from banks or poor infrastructure. According to a report, 57% of Africans are without a bank account, and this includes mobile money accounts. Digital payments have become a viable means for improving access to financial services and promoting financial inclusion by eliminating those barriers.
Beyond individuals, digital payments have also positively affected informal businesses that usually rely on physical cash to run operations. The informal sector is the primary source of employment in Africa, accounting for 80.8% of the jobs on the continent, according to the World Bank. With digital payments, these businesses can have access to credit and formal financial services, create a digital financial footprint, and actively participate in the formal economy.
Regional companies have a big role to play when it comes to driving innovation and building a robust digital payment infrastructure. They possess a deep understanding of the financial landscape, local markets, and the circumstances particular to that region. This understanding allows regional companies to tailor their payment infrastructures to fit the needs of their regions.
Also, regional companies have already established partnerships with key players in the digital payment infrastructure. Companies like Zone and Cellulant are already the frontrunners in digital payment innovation in their respective regions. Zone attempts to revolutionise Africa’s payment infrastructure with blockchain technology and give rise to low-cost and seamless intra-African transactions while Cellulant is looking to integrate multiple payment methods into a single point of acceptance via merchant websites, mobile applications and physical outlets.
Cellulant: Pioneering Digital Payments in East Africa
Cellulant is a digital payments platform that provides seamless digital payment transactions for Africa’s global, regional, and local businesses. The company seeks to build an extensive payment platform that will allow African businesses to seamlessly make and receive payments. To address the problems businesses face when managing various payment channels, Cellulant launched Tingg in 2019. Tingg allows different kinds of businesses to receive in-store or online payments from customers through their mobile money apps, local and international cards, or their bank.
The payment platform also enables these businesses to make payments in different currencies and to multiple regions. As of 2022, Tingg has linked thousands of businesses with over 350 payment methods spanning over 35 countries across the continent.
Apart from facilitating digital payments, Cellulant has made strides in blockchain technology through Agrikore. Agrikore serves as a blockchain-based digital marketplace for farmers, traders, and processors. The blockchain platform enables all stakeholders in the agricultural sector to view the market securely and transparently, fostering financial inclusion. Through Agrikore, Cellulant looks to fix Africa’s fragmented agricultural economy by addressing issues such as low trust levels, market access, low levels of digitization, and financial exclusion.
Since its inception, Cellulant has sought to foster financial inclusion and economic growth by forming strong partnerships with businesses and government agencies. The company promotes financial inclusion by creating a more affordable method for businesses to make and receive payments to and from other businesses. This greatly reduces operational costs for small businesses that wish to process payments quickly without sacrificing expansion. Individual customers will also greatly benefit from Cellulant’s digital payment system, as they can buy goods and services through different means.
Cellulant has integrated its payment solutions into existing infrastructure through these collaborations, making it simpler for people and companies to access and use their services. Cellulant has increased the size of its client base and sped up the acceptance of digital payments in the area by utilizing these partners’ already extensive networks. As a result, financial transactions are now more efficient, transparent, and secure, creating a favorable atmosphere for economic growth.
The fintech company has partnered with several businesses, and these partnerships have facilitated the integration of Cellulant’s digital payment system into their payment infrastructure. Cellulant now powers payments for 200 million consumers on a single, inclusive network for interoperability throughout Africa. The company connects thousands of businesses with 257 payment options across 35 countries.
Zone: Transforming Africa’s Payment Landscape, Starting with Nigeria.
Most of Africa’s fintech and banks have traditionally carried out inter-bank payments via a centralised network—electronic financial transaction switches. These switches act as a single point of contact between financial institutions. They also take care of settlements at defined intervals. However, these switches cause significant downtime when they fail and sometimes create reconciliation issues.
Zone, Africa’s first blockchain platform by Zone Payments Network (formerly Appzone Group), seeks to mitigate the issues these electronic financial transaction switches tend to have. By creating a decentralised system where key players can connect directly, the platform prevents a single point of failure from affecting the entire system.
Zone facilitates local and intra-African payments in fiat and digital currencies seamlessly without the need for intermediaries through its regulated blockchain-powered Payment Infrastructure. Its payment infrastructure is already addressing the current transaction failures and eliminating reconciliation issues that plague the traditional centralised system for the Financial Services providers on its network.
Zone provides its users with quick and instant payments, reduces transaction costs, and allows beneficiaries to get instant value for each transaction. This, in turn, enhances the end-user experience. Zone is building out a real-time settlement layer for intra-African payments through the implementation of an asset-backed digital token that grants banks, fintechs, and OFIs the ability to process payments without worrying about mechanism or currency for settlement..
Over 20 of Nigeria’s biggest commercial banks and fintechs have adopted Zone’s regulated blockchain payment infrastructure. These financial services providers can access Zone’s APIs for different transactions, including account-to-account transfers, merchant payments, and cash transactions at ATMs or agent locations.
On December 30, 2022, at the height of the previous holiday season and two months after taking its blockchain network into production, Zone facilitated N408,691,500 — almost $1 million — in ATM transaction volume for four banks (First City Monument Bank, Guaranty Trust Bank, United Bank for Africa, and Zenith Bank). The number of transactions was close to 50,000. In that month alone, the blockchain platform carried out nearly 797,000 transactions worth $14.3 million.
Zone’s innovative technology is poised to drive financial inclusion by empowering Financial Services Providers on its network to deliver reliable and efficient payment experiences to their end customers. With Zone’s innovative payment infrastructure, the future of payments in Nigeria and Africa is being redefined. This cutting-edge platform is enhancing trust for end customers and heralding a new era of disruption and innovation for the continent’s financial services industry.
PayFast: South Africa’s Digital Payments Innovator
Payfast is a South African payment gateway platform founded in 2007, Today, the platform caters to 80,000 merchants in the country, including businesses, individuals, and causes, helping them manage their online payments. PayFast enables merchants to accept online payments using credit and debit cards, instant EFT, and Bitcoin. It offers a range of features and is known for its user-friendly interface.
Besides being the first payment processing solution in South Africa, PayFast offers merchants multiple payment methods, both traditional (like credit cards) and modern (like cryptocurrency). This way, PayFast caters to customers’ and merchants’ evolving needs and preferences.
PayFast also offers a range of features that enhance the overall payment experience. These include secure payment processing, fraud prevention measures, transaction history, tokenization, and customizable payment pages. These features contribute to a robust and reliable payment solution for merchants.
PayFast’s wide merchant base in South Africa is a testament to its significant impact on the country. The wide adoption of PayFast by a diverse range of merchants reinforces its reputation and industry recognition and reflects its contribution to the growth and development of the South African economy. By enabling businesses to accept online payments seamlessly, PayFast facilitates commercial transactions and supports entrepreneurship and e-commerce in the country.
PayFast caters to different payment preferences by accepting a wide range of traditional and non-traditional instruments, including credit and debit cards, instant EFT, and Bitcoin. This, in turn promotes inclusivity by removing barriers to commerce for individuals who may not have access to traditional banking services. More so, PayFast is accessible to small and medium-sized enterprises (SMEs) owing to its user-friendly interface and easy setup.
By facilitating e-commerce, supporting SMEs, accommodating diverse payment preferences, and ensuring affordability, PayFast plays a significant role in promoting economic growth in South Africa.
Paymob: North Africa’s Payment Pioneer
At the forefront of North Africa’s digital payment development, Paymob is an Egyptian fintech company, that seeks to enable merchants to receive digital payments online and in stores. Many companies have integrated Paymob’s digital payment platform into their digital payment infrastructure.
In 2022, Paymob had over 100,000 local and global merchants using its payment gateways. This included companies like LG, Virgin, and Chalhoub Group. Paymob’s omnichannel payments infrastructure allows the platform to accept payments in different ways, such as bank cards, mobile wallets, QR payments, bank card instalments, BNPL, and consumer finance payment options. The payment gateway platform also provides a POS solution that allows offline merchants to collect in-store card payments.
Paymob, in its partnership with MasterCard, plans to introduce a new product—tap-on-phone contactless payments—that leverages contactless payment technology. The cost of obtaining a POS machine tends to be burdensome for small businesses. Small business owners can convert their NFC-enabled smartphones into POS machines by downloading the Paymob app. Along with contactless technology, Paymob is looking to launch a new checkout platform to enable B-to-B payments.
Paymob’s products will undoubtedly provide North Africans with accessible and inclusive payment solutions. It will also empower small and medium-sized businesses through its payment gateway technology, allowing them to easily receive and make payments. In 2020, Paymob reported $5 billion in payment volume, conducting 120 million transactions. The company has also stated that, as of December 2021, its monthly volume had grown four times year over year.
Conclusion
Digital payments are profoundly reshaping Africa’s financial landscape, driving economic growth and facilitating financial inclusion. Key players such as Cellulant, Zone, PayFast, and Paymob are at the forefront of this revolution, each introducing innovative solutions tailored to their regions’ unique challenges and opportunities.
East Africa’s Cellulant is leveraging blockchain technology to provide seamless digital transactions for businesses and foster financial inclusion in the agricultural sector. Based in West Africa, Zone uses blockchain to enhance payment efficiency and reliability, addressing the region’s issues with traditional centralized systems. South Africa’s PayFast caters to a vast range of payment preferences, from traditional credit and debit cards to Bitcoin, making it an inclusive and reliable payment platform for merchants. North Africa’s Paymob, on the other hand, provides businesses with a flexible omnichannel payment gateway, with plans to further enhance their service through contactless payment technology.
However, challenges persist, particularly in terms of failed transactions and complex money transfers across African countries. As these payment platforms continue to innovate and refine their services, they are set to bring about an era of improved transaction efficiency, financial accessibility, and economic prosperity for Africa. Their efforts highlight the potential of digital payments to foster economic growth and empower individuals and businesses across the continent.
