Africa’s mobile money market is booming, with over 560 million registered accounts and $495.3 billion in transactions in 2020, according to the GSMA. The continent is home to some of the most innovative and successful mobile money services in the world, such as M-Pesa, MTN Mobile Money, Orange Money and Airtel Money.
Mobile money is a digital payment service that allows users to store, send and receive money using their mobile phones, without the need for a bank account or a physical card. Mobile money has been a lifeline for millions of Africans who lack access to formal financial service.
These services allow users to send and receive money, pay bills, buy airtime, access loans and savings, and more, using their mobile phones. They have also enabled financial inclusion for millions of people who lack access to formal banking services.
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However, mobile money is not without its challenges. One of the main barriers to growth is interoperability, or the ability of different mobile money platforms to connect and exchange value with each other and with other payment systems. Currently, most mobile money transactions are limited to users within the same network or country, which limits the potential for cross-border and regional trade.
This is where global payment giants like Visa and MasterCard see an opportunity. Both companies have been investing in partnerships and initiatives to tap into Africa’s mobile money market and offer solutions for interoperability, security and convenience.
For example, Visa has launched Visa Direct, a service that allows users to send and receive money from any Visa card or mobile money account in the world. It has also partnered with M-Pesa, MTN Mobile Money and other providers to enable users to link their mobile money accounts to Visa cards or virtual cards that can be used for online shopping or at any Visa merchant.
MasterCard has also been active in the mobile money space, launching Mastercard Send, a service that enables cross-border remittances and business payments from any Mastercard card or bank account to any mobile money account. It has also collaborated with Airtel Africa, Orange Money and other providers to offer users Mastercard-branded virtual or physical cards that can be linked to their mobile money accounts.
Both Visa and MasterCard have also joined forces with the African Development Bank (AfDB) and other stakeholders to launch the Africa Digital Financial Inclusion Facility (ADFI), a fund that aims to accelerate digital financial inclusion across the continent by supporting innovative projects that leverage mobile money and other digital platforms.
By partnering with mobile money providers, Visa and MasterCard are not only expanding their reach and customer base in Africa, but also enhancing their value proposition and competitiveness in the global payment industry. They are also contributing to the development of Africa’s digital economy and financial inclusion agenda.
MasterCard has collaborated with MTN Group, Africa’s largest mobile operator, to launch a mobile money platform that allows MTN customers to pay online and in-store with a Mastercard virtual card or QR code. It has also joined forces with Ecobank, a regional banking group, to launch a digital payment solution that integrates Ecobank’s banking services with multiple mobile money wallets.
Both Visa and MasterCard see Africa as a strategic market for growth and innovation, as the continent is undergoing a rapid digital transformation and has a large population of young and tech-savvy consumers. By partnering with local players and leveraging their global expertise and network, they hope to capture a slice of the lucrative mobile money pie and contribute to the development of Africa’s digital economy.
However, they also face some challenges and risks. For one thing, they have to contend with the regulatory and operational complexities of operating in different markets with different rules and standards.
But some analysts are skeptical about the motives and impact of these global players entering the African mobile money space. They argue that Visa and MasterCard are mainly interested in tapping into the huge transaction fees that mobile money generates, rather than improving the lives of the unbanked and underbanked.
They also warn that these partnerships could pose a threat to the local innovation and competition that have made mobile money so successful in Africa. They fear that Visa and MasterCard could use their dominant position and influence to dictate the terms and conditions of the mobile money ecosystem, potentially undermining the autonomy and sovereignty of the African operators and regulators.
Both companies have launched products and services that enable mobile money users to link their accounts to physical or virtual cards, access ATMs, shop online and pay at merchant locations. They have also partnered with local mobile operators, banks and fintech startups to offer innovative solutions that cater to the needs and preferences of African consumers. Visa and MasterCard have been expanding their presence and partnerships in Africa, aiming to tap into the growing demand for digital payments and financial inclusion.
Moreover, they question whether Visa and MasterCard can truly understand and cater to the needs and preferences of the African mobile money users, who have different cultural and behavioral patterns than their counterparts in other regions.