South African mobile payment market to reach US$ 14 billion in by 2020

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South Africa is the most advanced economy of the African continent. The country has a more developed banking market, compared to its other counterparts in the continent. Local banks here have succeeded in providing reliable and easily accessible banking services to low-income customers. South Africa’s three major retail banks – Absa, First National Bank and Standard Bank – have individually increased their share of low-income customers by opening up entry-level bank branches and banking kiosks in remote areas, bringing banking services closer to where people live.

Also, South Africa’s mobile money market has strong products such as Shoprite Money, FNB eWallet and Mobile Money from MTN. All of these products have robust distribution networks and large cash acceptance and disbursement access points which are critical elements of a remittance product.

Due to South Africa’s advanced banking sector, rigid regulatory framework and a lack of demand, Vodacom’s mobile money product M-Pesa exited the South African market. However, market dynamics are changing, driven by country specific mobile payment solutions. According to PayNXT360, the South African mobile payment market is expected to record a CAGR of 35.6% from 2016-2020 to reach US$ 14 billion in transaction value terms by 2020.

The case in point is of MobiCash, Africa-focused cashless financial platform. Considering the economic diversity of South Africa, MobiCash along with cellphone payments company Boloro, recently launched a mobile money system targeted at townships and spaza shops (an informal convenience shop business in South Africa, usually run from home). According to company reports, the MobiCash – Boloro mobile money platform has been performing well in other parts of the African Continent as Botswana, Ghana, Kenya, Rwanda, Uganda and Malawi.

The rationale behind the partnership has been stated as to democratize financial access for excluded communities by offering secure payments and resolve the pain-points associated with carrying cash.  The association will provide customers with disruptive technology through which the customers will be able to perform their daily transactions seamlessly over wider channels within the virtual realm.

Not only the partnership between the two companies will help small-scale retail businesses in the townships to make mobile payments, but also using MobiCash m-commerce option the merchants will be able to place orders with their wholesalers.  Multi-factor biometric authentication along with Boloro's secure pin authentication that uses network initiated USSD messaging is intended to make payments across the platform secure, consumer friendly, handset agnostic, and merchant initiated.

A South African retail chain operator in the townships, Big Save, has also agreed to rollout this new platform, that entails no starting or operating fees, across its thousands of spaza community members. MobiCash customers can also avail other value added services such as insurance, tax returns and cash remittances through this multi- services platform.  The company also planned to expand the platform to encompass other acceptance such as conveniently paying for taxi fares and secure online payments, to boost the payments ecosystem in South African township and urban even faster. 

To know more and gain deeper understanding of mobile payment industry in South Africa, click here.