Agnes Muthoni
PAYMENTS: THE EAST LEADS THE FUTURE OF FIN-TECH
There is a new kid in the fintech market that is grabbing the global spotlight.
While fintech funding seems to have dipped in most spheres, payments remain the darling. According to a 2022 report, mobile wallets accounted for roughly half of global e-commerce payment transactions. Making the digital wallet by far the most popular online payment method worldwide. This share is set to increase to over 54% by 2026. Credit cards ranked second with a 20% market share in 2021, a figure which is projected to decline in the coming years.
So what’s the fuss about?
Mobile payments or Click to Pay enables consumers to make payments without entering their card credentials or storing sensitive information across different online platforms. Making payments frictionless within seconds. Except this time, the East is leading the brave new world of payments.Digital or mobile wallet was most popular in the Asia Pacific Region, where it accounted for approximately 60% of e-commerce transactions in 2020.
Mastercard’s bets on click to pay in africa
The African market is ripe with opportunities for click-to-pay.
Two years after investing $100 million in Airtel’s mobile money business, in August this year Mastercard agreed to buy a minority stake in MTN Group Ltd – Africa’s largest cellphone provider at a whopping $5.2 billion.
In June this year, Mastercard collaborated with PayU, a leading payment service provider for online merchants in South Africa, to launch Click to Pay for the first time in the country.
In an interview, Mark Elliott, President of Sub-Saharan Africa at Mastercard says with regulators in Africa “open to innovation”, Mastercard is seeing Click to Pay as a “way of laying the digital road map” for the wave of future tech investments in the continent. In the same interview, Elliott also revealed that Mastercard wants to collaborate with local fintech organizations in Africa to power Click to Pay initiatives. To enable contactless payments through phones, it is already working with Nigeria-based KaiOS which wants to fill the market gap by providing smartphones for as cheap as $25.
India’s upi is a model for africa and the world
If we’re looking for inspiration to build a strong Click to Pay system for Africa, both the inspiration and the business model are very close to home.
India’s national Click to Pay system or unified payment interface (UPI), is a mobile payment method that allows Indians to transfer funds from one bank account to the other, instantly and free of charge.
As of recent reports, UPI handles 220 million transactions per day, in an economy where the unorganized sector employs more than 50% of the workforce. In a matter of just seven years, UPI has accounted for almost 75% of total transactions in the retail segment during from 2022-23.
Launched in 2016 and regulated by the Reserve Bank Of India, stakeholders have expressed that UPI owes its popularity to a user-friendly design and security system without any hidden costs.
Here are some key features of the UPI system that make it accessible to even those who were previously unfamiliar with net banking or mobile banking applications:
Today in India, UPI QR code stickers are found stuck or framed from the roadside hawker to the fanciest hotels, across remote hill stations to its teeming metros. Scan and pay is the new normal.
But UPI’s success owes itself to more than just technology. India’s unique positioning also has a significant role to play. Experts have credited UPI's growth to critical events, including the 2016 demonetization drive in India and the COVID-19 pandemic. Both boosted UPI's position as a reliable digital payment solution.
Factors that powered the upi ecosystem in india:
But UPI is not just a national success story.
The National Payments Corporation Of India (NIPL) has partnered with countries like Nepal, Bhutan, UAE, and the UK to make the UPI-based QR code solution available for its citizens. By the end of this year, five Southeast Asian goliaths—Malaysia, Singapore, Indonesia, Thailand, and the Philippines—will reportedly combine their respective QR code payment systems with UPI. With India having the largest diaspora in the world, the country is also developing solutions for cross-border real-time payments for remittance using Click to Pay.
Including in Africa.
Africa and india for click to pay
In September this year, Flutterwave, Africa’s most valued startup, expanded into India to offer its remittance product after partnering with IndusInd, the 6th largest bank in India by assets.
Making the Indian expansion of Flutterwave the first African company to do this at scale where remittances from India to Africa become “seamless and quick”. Such developments, make the Indian UPI story not only a model of inspiration for Africa to build its own Click to Pay system but also consider India as a synergetic business partner in the payments landscape.
From the likes of it, the global South has made the first leap towards frictionless payments. For African tech leaders this means that when it comes to payments, East-East partnerships are likely to lead the way.
Cover image credit: PayTm.
Image Credit: PayTm
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