By Onome Amawhe
Mastercard is a major driver behind the evolution of the global payments industry. Since the early 1960s when it launched the debit and credit cards methods, there’s been a hugely growing enthusiasm for e-payments. In sub-Saharan Africa, where the evolution has been faster and more far-reaching, Mastercard has also championed a tantalizing convenience-driven path; imbibing in consumers, an attitude toward a mobile system of payments. Daniel Lanre Monehin, who runs MasterCard’s business across sub-Saharan Africa as Division President thinks the payments and transactions processing market in SSA is changing rapidly. And that the major driver of development is digital, particularly in light of its ability to remove the need for cash and enable inclusion for those who have previously been excluded from the financial mainstream.
CAN you give us an insight into the history of Mastercard in Africa?
Mastercard opened its first office on the continent over 23 years ago and our payment technology has been deployed in 52 of 54 markets in Africa and is introducing new capabilities that are rapidly closing the gap between the banked and unbanked on the African continent. Alternative delivery channels pioneered by Mastercard such as m-commerce, e-commerce, contactless technology and digital wallet services, are helping financially-underserved consumers gain access to formal financial services.
We are committed to Africa’s growth, and have a strong footprint on the continent including offices in Lagos, Nairobi, Johannesburg, Cape Town, Casablanca, Cairo with smaller hubs in Durban, Zambia, Ethiopia, Rwanda and Abuja. The first office to open in sub-Saharan Africa was Lagos, with a staff count of two people. Since then the region has grown tremendously with dedicated resources working with all stakeholders face-to-face on a daily basis.
Mastercard has in fact been a part of the global payments industry for over 50 years as it was founded in 1966 as Interbank Card Association and in 1979 changed its name to Mastercard. When Mastercard started there weren’t even payment cards, people were issued with a piece of paper authorizing payment. Since then we have seen the emergence of debit and credit cards, online payments and now payments using QR codes and mobile devices.
How important is the African continent for Mastercard?
Africa is hugely important for Mastercard as it’s full of potential. According to the World Bank, roughly two-thirds of the adults on the continent remain unbanked and card penetration is low. By improving access to digital payments and the formal economy, we will be able to help more people contribute to healthy, sustained economic growth. Mastercard has made a commitment to connect more than 100 million Africans to formal financial infrastructure by 2020, because a financially included society ensures prosperity and security for every citizen.
What is your view of the current “payments and transactions processing” market in SSA?
The payments and transactions processing market in SSA is changing rapidly. A major driver of development is digital, particularly in light of its ability to remove the need for cash and enable inclusion for those who have previously been excluded from the financial mainstream. We believe the promise of mobile payment services lies in creating safer, simpler and richer experiences for consumers, merchants and participants of the African economy. We want to enable users to do something new and better and make the payment process more efficient and as safe as possible.
We’re also seeing merchants using apps that turn their smartphones into point of sale devices or use QR codes to accept mobile payments from their customers. Mobile technology brings the convenience and safety of cashless transactions to sectors where traditional card terminals are not a practical or affordable solution. The natural endpoint is that we’ll see much of today’s large-scale physical payment infrastructure move onto digital form, giving merchants and consumers a simple, seamless, on-demand solution without the need for costly infrastructure or cash.
Where do you see payments and transactions evolving in the future?
Mobile technology bridges the economic divide in a manner that no other piece of technology or tool has done in the past. It opens up access to cheaper banking and financial services, it creates efficiencies in supply chains and it opens up markets in the rest of the world to producers and manufacturers in Africa. The payment sector is going digital, and the mobile device is at the heart of the change. We predict a steady growth in this area, with more people becoming accustomed to transacting in this way.
If you consider the e-commerce sector, we are seeing huge growth in e-commerce on the continent and believe that this will continue to grow in the future as yearly e-commerce sales in Africa are projected to reach $75bn by 2025. Our focus as a company is now firmly on driving efficiency in the sector and removing the need for cash by introducing smart solutions that helps to simply the payment process for consumers and e-retailers.
What’s it like to be in a business that’s changing the world?
Being in a business that is so focused on changing lives positively and enriching communities is incredibly rewarding professionally and personally. While a business like Mastercard has its challenges, knowing that at the end of the day you’re helping a small business owner make an income in order to send her child to school makes it all worth it. Our role however extends beyond financial inclusion, and we seek out partners that share our vision of a more inclusive and empowered continent.
Key to this is addressing issues such as the refugee situation, where innovative solutions is needed to help give back dignity to those displaced by famine or war. Additionally, our commitment is also focused on celebrating local talent, as such our Mastercard Lab for Financial Inclusion in Nairobi for example is focused on solving challenges facing African’s with the help of local insights and experience. Additionally, we are working with start-ups and Fintech’s to introduce smart solutions born out of local insights.
Within the SSA market, is there any specific industry segment that you see to have increased potential, but have not yet penetrated?
There are a few key sectors that we are looking at for the near future, specifically the health and insurance sectors. We are starting to make headway in these areas already, so watch this space for more to come from Mastercard.
How do you think new digital payments technology can help small businesses meet the demands of today’s consumer?
Digital payments technology is already making a big difference. Supporting the sustainability and growth of Micro, Small and Medium Enterprises, and pioneering solutions to connect informal traders to the formal financial ecosystem is the catalyst needed to catapult the continent’s growth.
Mastercard has witnessed first-hand the positive impact that digital payment solutions aimed at micro merchants and entrepreneurs can have in Africa. It is for that reason the organisation has been focused on building partnerships with market leaders in the public and private sectors – from governments to banks and developers – in order to create resilient digital payments ecosystems comprised of solutions and services that enable real and measurable financial inclusion.
In line with this, a number of cutting-edge products and services have been introduced into the market in the past few months, including Masterpass QR, 2Kuze with the expansion of our remittance offering, HomeSend. Masterpass QR is the interoperable, mobile-driven Person to Merchant (P2M) payment service integrated into Ecobank’s mobile banking platform. The solution was initially launched in Nigeria and is currently being rolled out in a total of 33 markets across the continent, with the intention of reaching 100 million customers by 2020.
Studies byGSMAindicate that mobile has taken over as the platform of choice for creating, distributing and consuming innovative digital solutions and services in Africa, mobile is an obvious way to boost the growth of the traditional retail and e-commerce sectors and deliver a more user friendly experience.
What do you think are the key technology trends driving the global payments market?
Through a study that Mastercard released in conjunction with Deloitte on “leveraging digital to unlock the base of the pyramid market in Africa” we found four trends that are impacting financial inclusion and driving the payments market in Africa. 1. Mobile as an acceptance tool 2. Digitising key value chains. 3. Remittance ensuring more secure money transfers solutions. 4. Electronic Identity Solutions
How is Mastercard leveraging these trends through its products and services and what factors do you think would drive cashless services in emerging economies?
In a world where about 85% of retail transactions are still made in cash, the potential to really make a difference is immense. We are leveraging all forms of digital solutions to reach as many people, and to support our partner’s business goals across the continent.