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Mobile payment has been transforming the landscape of the African economy for a while now. Significant development in last couple of years has revolutionized mobile payment transactions in Africa. With over 1.2 billion population accounting for nearly 16% of world population, Africa has been lagging behind in various facilities and infrastructures. But now tech companies in association with financial services companies are expanding the reach of financial solutions to unbanked population in Africa.

African technology evolution can be called as a ‘Leapfrog effect’ as it shows quite good response to mobile payment from Africans. The credit goes to other technology developments such as mobile internet and e-commerce. According to PayNXT360, over 75% of sub-Saharan Africa will be connected to mobile by 2025.

This means an opportune time for the tech companies and mobile money service companies to invest in African region. They need to introduce and make mobile payment a pivotal part of the local payment strategies. Mobile payment services have played a key role in African markets such as Kenya, Nigeria, and South Africa in achieving greater financial inclusion.

Africa is emerging as a key region in mobile financial services with over 120 mobile money services. According to PayNXT360, about 36% of African population now has mobile money account.

Africa is a continent with several countries which have their own belief systems, preferences and motivations. As a greater part of a strategy treating each market differently with primary focus on developing infrastructure holds the key. Introducing industries such as e-commerce, app based services and mobile money technology along with effective customized local payment strategy will be crucial.

There is uneven market for mobile payment across Africa and penetration of mobile internet network plays crucial role in this. East Africa and Ghana have more penetration for mobile payment services, where several countries including South Africa, Botswana and Zimbabwe are considered next opportunities, whereas Egypt is considered to be one of the dark horses.

Apart from mobile internet availability, the scenario for mobile payment services will be heavily dependent on tie-ups and collaboration between banks, fintechs and mobile payment service providers with mobile network operators.

M-Pesa a mobile payment service provider tied up with PayPal and Western Union and Mobile operators Orange and MTN for mobile wallet. M-Pesa achieved about 25 percent of the mobile payment market share in East Africa and now it is expanding its operations in West Africa and abroad. With 28.5 million users in East Africa, M-Pesa has revolutionized mobile transitioning in Kenya and Tanzania.

As of now interoperability and cohesive collaboration between different players is a challenge. Especially for conventional banks from Africa who are bit conservative in their approach towards modern technologies and inclusive strategy. However these banks are pressurized by Fintechs and financial technology platforms as these companies are expanding their service base into other financial services than mere payment transactions.

Mobile payments using Quick Response (QR) codes are the new sensation in Africa’s mobile payment market. It has preceded mobile payment by SMS and Near Field Communication. Visa and MasterCard are entering African mobile payment markets using QR code. This is said to be their strategy to compete with M-Pesa.

QR codes save on investing in Point of Sales (PoS) machines and that brings advantage for merchants that opt for QR code scanning. And printing QR code on a paper can initiate the payment for the merchants. Mostly, QR codes need the Internet for the operations; however mVisa has introduced customized solution that allows feature phone users to pay by QR code by typing the mVisa ID. This is quite threatening to M-Pesa as it is mostly relied on its customer using feature phones and make payments using SMS.

M-Pesa has quickly responded to the competition and its parent company Safaricom launched Lipa Na M-PESA option by scanning QR codes. The app has over 1.6 million users from both Android and iOS platforms.

Major cities of Africa including Kenya, Nigeria, Tanzania and Ghana are now using QR codes.

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