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DUDUZILE RAMELA: Let’s take a look at this now. The space of digital payments, from M-Pesa in the East African nation of Kenya to eWallet here at home and the likes of Mukuru, which exists in over 20 countries. The payment system on the African continent has taken shape and is ripe for growth. South Africa, get this, is the largest sender of remittances to other countries on the continent, making the cashless digital payment system one of the most sophisticated.
Hayley Hopwood is head of revenue at Paystack. She joins us now to take a look at the future of cashless payment systems in the African continent. Hayley, thank you so much for your time this afternoon. Perhaps we’ll start with a breakdown and the definition maybe of these words. So when we speak of cashless or digital payment systems, what are we talking about in essence?
HAYLEY HOPWOOD: Yeah, so we’re talking about different methods and ways to pay other than your traditional way, which is using cash. So over the counter, that could be tapping your card or tapping your mobile device, and online it can mean using a digital wallet, which is essentially, think about your physical wallet, and you have multiple different cards in that wallet, your digital (wallet) is no different.
You can fund it with a multiple array of different ways to pay or you can use your credit card or debit card online as well. So there are many ways in which to make a transaction work in today’s society.
Read: Cash is king no more: The trend towards lighter pockets
DUDUZILE RAMELA: I was listening to a very interesting webinar, albeit briefly, yesterday and they were talking about the movement of people on the African continent. It turns out that even though we may see headlines to say there are a number of people who have drowned in the sea while making perilous journeys, there’s actually more movement within the continent than outside, which means that people will be sending remittances home. So when we take a look at the space of remittances on the African continent, which countries are leading the pack when it comes to digital payments?
HAYLEY HOPWOOD: I think South Africa is still one of the most popular ways if you’re looking at digital payments, and it’s driven by mobile-first. So I think we’re seeing a rise on the continent with just mobile devices in general. What we’re finding is one in three transactions occur via a mobile device…
If you’re thinking about digital wallets in that stream, it’s very convenient to load your method of payment through your mobile phone and just instantly make a payment via a digital wallet.
So that adoption is much greater and faster, which is the rise that we’ve seen last year, which is over 20% within the South African market.
DUDUZILE RAMELA: What has made M-Pesa so popular in Kenya?
HAYLEY HOPWOOD: I think it’s just the ease of use. So it works in a non-WiFi environment, so you don’t necessarily have to be online, you can still enable some transactions offline. As well as the fact that it’s accessible for many. I think that that’s the one thing that we need to take into consideration when we’re thinking about how we address all individuals rather than the few?
DUDUZILE RAMELA: Mukuru, it exists in a number of countries on the continent, wherever you want to send money, you can head on over to Mukuru. What do you perceive is behind that? What, brand’s popularity?
HAYLEY HOPWOOD: Yeah, and I think it goes back to that habituation piece I was talking about before. It’s convenient, it’s mobile-first approach, and it’s also secure. So once people tend to, because it’s your money, it’s very personal, it’s uncertain. Once you use something more than three times and you know that it’s secure, it’s fast, it gets to where you are wanting it to get to, people habituate to using it and feel confident around that certain method. So that’s where we find that these types of payment methods grow very quickly because of word of mouth, mobile-first approach, and just convenience.
Read: Mobile money in Ghana isn’t all good news …
DUDUZILE RAMELA: There’s convenience, yes. But for instance, one of these you have to physically go to the outlet in order to make payments as the sender, so when we speak, Hayley, about the future of this, what if I don’t want to go physically to an outlet? What if I just want to open up my laptop remotely and then send money from there? What are we looking at when we speak of the future of digital payments on the African continent when I’m not able to open my laptop and send money to Ghana, for instance, via my bank?
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HAYLEY HOPWOOD: Yeah, I think there’s still a little bit of work that we need to do on the continent to make that as seamless as what we see in global trends occurring in other areas of the world, and how that adoption creates that deeper market penetration. But there is an appetite, and I think that it is being revolutionised by consumers because that is exactly what they’re wanting to do.
So we are starting to see that the demand is there, and businesses really have to look at their customers and their consumers to go, okay, how do we enable that.
There are more complexities around the banking infrastructure that need to occur in order to make that happen. But you’re starting to see pockets of it and certainly in South Africa we’re starting to see it, in Kenya we do see it, but there’s still more room for growth around intercountry transfers around Africa and then abroad around the globe as well. But we’re slowly getting there, but it’s very much a journey.
DUDUZILE RAMELA: You speak of banking infrastructure and South Africa has got the most banked clients, if you will, simply because of our infrastructure, which is said to be among the best in the world, and can hold its own against first world countries, if you will. But this space of digital payments, when you look at the rest of the continent where the banking infrastructure is not where it needs to be as yet, what threat or opportunity does it pose when people are like, well, why do I need to go to a bank because Hayley can simply send me an eWallet or she could go to Mukuru and send me a number and I go to my local outlet and take out the money.
HAYLEY HOPWOOD: Yeah, we do see that starting to become a trend more and more, and certainly around the globe it’s something that’s ripe, where it’s like a closed loop infrastructure where if you’re staying within that network of whether it’s a service, whether it’s a product, or whether it’s banking infrastructure, the payment actually doesn’t leave that ecosystem.
So you see wallets that are expanding out to P2P (peer-to-peer) transfers and then, you know, P2C (product-to-consumer). So you do start to see this infrastructure being led through technology rather than banking infrastructure where you can enable those types of transactions in a closed loop environment. But you have many different closed loop environments.
But it also creates loyalty programmes and other things that can stem off from that as well. So rather than just talking about it from a bank to bank, how do you make a payment, we’re starting to see diversifications where businesses themselves are saying, actually, I think I could do this differently.
DUDUZILE RAMELA: Speaking of diversification, Hayley, I’m so curious because you can’t speak about education, you can’t speak about health, you can’t even speak about bread without mentioning artificial intelligence. So AI being the word of the day, what do you perceive, or rather maybe you can help us understand how that would work, whether there are examples that we are seeing already of AI in this space of digital payments.
HAYLEY HOPWOOD: We are, it’s very early days, and it’s one thing to consider that technology can get us there really quickly, but humans need time to adopt this. But the likes of things that I think we’ll see firstly is, book me a 10-day holiday to Turkey, I want adventure, I want hot-air ballooning, and I want direct flights. AI can actually write you that itinerary. It can actually find you those flights using all of their infrastructure and it can find you hot-air ballooning or whatever adventure that you are looking for. If you are wanting to proceed, the next natural thing is click here to pay.
So AI is it basically orchestrating your whole holiday based on whatever your family or your individual requirements are, it can actually find those flights through an airline, find accommodation, find adventure travel, and then the last leg is how do I make that payment. The infrastructure of that payment is quite complex because you’re paying an airline, you’re paying a hotel, you’re paying adventure, you’re hiring a car, all of those sorts of things. But I think with AI, that’s one example, being travel, is what you could expect to see.
DUDUZILE RAMELA: Very fascinating. Hayley, thank you very much for your contribution this afternoon. Hayley Hopwood is head of revenue at Paystack.
