Mobile payments are rapidly evolving in Africa

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Though M-Pesa from Kenya is still the most successful, the market is growing quickly.

M-Pesa, the mobile payments program from Kenya’s Safricom, is easily the top form of smartphone transaction in Africa, but that marketplace is rapidly growing and evolving with many other players taking part.

Many are surprised to find that there are parts of Africa where its competitors are in the lead.

Africa is one of the regions where mobile payments are taking off like wildfire. In fact, the population appears to be making massive move toward a cashless experience, altogether. There are several different players in this marketplace, and each has its own strengths for competing with M-Pesa, which has experienced some technical issues and is more popular in some regions than in others.

There are several reasons that mobile payments are growing so quickly in Africa.

Among these reasons are the following three leading factors:

• The penetration of cell phones has been enormous and rapid in Africa. In 1998, fewer than two million people had the devices in the entire continent. By 2009, there were 400 million people with the phones. By the end of this year, it has been estimated by the GSM Association that 735 million Africans will have cell phones. This means that more than 7 out of every 10 people will have a device.

• The percentage of people in Africa who were underbanked or unbanked in 2009, according to the World Bank, was 70 percent.

• The majority of the people living in the continent reside in rural areas that don’t have any form of convenient or realistic access to the banking infrastructure. Those people receive money from family members who are employed in distant urban workplaces and who send the funds back home again. That said, both the urban and rural residents have cell phones.

M-Pesa was the first major launch of a mobile payments service in Africa, in 2007. It became highly popular among individuals who were working in cities and who were sending money back to their families in rural areas because they were able to share the funds wirelessly across the miles. Other companies have since caught on and are starting to make their own marks across the continent, such as Econet Wireless’s EcoCash, from Zimbabwwe, as well as Nigeria’s Easywallet joint venture between Etisalat and FirstBank of Nigeria.

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