Mobile Money: what is it, and how does it benefit Africa?

The rise of mobile money has been especially significant in Africa – the world’s most prominent mobile money market. See what’s behind this phenomenon and how it pushes Africa’s development forward.

João Paulo Notini
April 24, 2023
7 min read
a man holding a phone in the street

Mobile money transfer has emerged as a game-changing technology in the payments industry, transforming how people send and receive money worldwide. 

The rise of mobile money has been especially significant in Africa, the world’s most prominent mobile money market, since more than half of the population doesn’t have access to credit and/or bank accounts.

Knowing about mobile payments is mandatory for any global brand willing to sell in African markets. So, in this blog post, we will explore how this type of alternative payment method works and how it has been contributing to the development of the region. 

What is mobile money?

Mobile money is a financial service that allows users to store, send, and receive money using a mobile phone. It is considered an alternative payment method (APM) and a form of digital payment that usually does not require a bank account. There are more than 270 mobile money services globally, and they are linked to a user’s phone number.

Each service can be accessed through a mobile app, USSD code, or SMS. Users can add funds to their accounts through cash deposits, bank transfers, or an agent network. Once the money is added, it can be used for different purposes, such as paying bills, buying airtime, or making purchases at merchants that accept these payment types.

The benefits of mobile money

As noticed, all mobile money users need is a cellphone. They can quickly transfer money at a low cost and, in many cases, without needing a bank account. Here are the key benefits of this technology: 

  • Financial Inclusion: Mobile money has the potential to bring financial services to people who have been excluded from traditional banking systems. By providing a convenient and accessible way to store and transfer money, this technology helps people save money, access credit, and build financial stability.
  • Convenience: Through mobile payments, people can make transactions anywhere and anytime using their mobile phones. This means they don’t have to go to a bank or an ATM, which can be time-consuming and expensive, especially in rural areas.
  • Safety and Security: Mobile transactions are often more secure than cash transactions. Mobile money service providers use advanced encryption technology to protect users’ personal and financial information, and a PIN or password usually protects every payment.
  • Cost Savings: Mobile payments can be less expensive than traditional payment methods, such as bank transfers and cards. Users can also avoid currency exchange rates and the high fees associated with withdrawing money from an ATM or sending money through a wire transfer.
  • Improved Business Efficiency: Mobile money can also benefit businesses by providing a more efficient way to pay suppliers and employees, collect payments, and manage cash flow. It can reduce the risks and costs of handling cash and improve transparency in financial transactions.

The power of mobile payments in Africa

Mobile money is one of the payment trends in Africa and has been a game-changer for a region where traditional banking services are often out of reach for almost 60% of the population. According to the World Bank, sub-Saharan Africa has over half of the world’s mobile money accounts, with over 400 million registered users. 

Another reason for this phenomenon is the large number of cellphone users in Africa. As seen below, there are more mobile subscribers than bank accounts in the continent. 

Mobile Subscriptions X Bank Accounts in Africa
Source: Beyond Borders 2022/2023

Mobile money technology has become an integral part of the African economy, with many businesses and individuals relying on it for day-to-day transactions. In 2021, for example, the continent’s mobile payments volume ​​increased by 39% and reached $701.4 billion – which is almost 70% of the total volume worldwide. 

share of the transaction volume of mobile money accounts worldwide
Source: Beyond Borders 2022/2023

Finally, the significant impact of mobile payments on cross-border sales in Africa is worth mentioning. People can send money across borders instantly and at lower costs. This has led to an increase in cross-border trade, attracted global brands, and has helped to stimulate economic growth across the continent.

Africa’s digital payments and mobile money examples 

By 2025, at least 70% of all online transactions will be made with alternative payment methods, according to EBANX’s Beyond Borders study. In this scenario, digital wallets, mobile money, and instant payments will rule the market, with cards representing only about 30% of online volume.

Online electronic payments in Africa - per year (2020-2025)

Looking exclusively at mobile money services, the majority of them are also instant payment methods, although they vary across continents. So, let’s have a look at some of the most popular and successful initiatives there:

  • South Africa – OZOW EFT  – Instant EFT by OZOW allows shoppers with access to internet banking to make an Electronic Funds Transfer (EFT) that gets instantly verified. It is the second most popular online payment method in South Africa and is currently used by around 30% of all digital commerce transactions. 
  • Nigeria – NIBSS Instant Payments – Launched in 2011 by the Nigerian government, NIIBS Instant Payments was the first and became the most efficient initiative in the country. This instant payment system generates an annual transaction value of around USD 380 billion.
  • Kenya – Pesalink  – Developed by Kenya Bankers Association in 2016, Pesalink is the most successful instant payment method in the country by having 32 banks connected, more than 3 million registered accounts, and around USD 200 billion in total transactions value. 
  • Ghana – GHIPSS Instant Pay – Launched in 2018, this instant payment method led by Ghana’s Central Bank became the most successful initiative in the country. It recorded more than USD 3 billion in transaction value in 2021, representing a 242% increase compared to 2020
  • South Africa – Real-Time Clearing (RTC) – RTC is one of the first instant payment initiatives in the African continent, RTC was launched in 2006, and since then, its popularity has been increasing. It recorded almost USD 110 billion in transaction value in 2021.  

Accepting mobile payments in Africa can be your next move!

As seen in this article, mobile money has emerged as a powerful tool for payments in Africa, offering a convenient, secure, and cost-effective way to send and receive money. This technology has transformed how people access financial services and has helped promote financial inclusion across the continent.

Thus, if your company wants to explore Africa’s vast digital commerce potential and expand there, you must accept the most popular and effective alternative payment methods available in each country. How? Through EBANX: a reliable and well-experienced payment partner in growing economies, including African markets. 

Are you ready to leverage your business in Africa?

Discover EBANX solutions for Africa

João Paulo Notini
João Paulo Notini
Senior Content Marketing | Cross-Border operations at EBANX

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