Payment News

South Africa Considers its Own Card and Payment System

As part of its National Payment System, the South African Reserve Bank (SARB) is considering a new domestic card and payment system and has issued a consultation paper.

SARB suggests a domestic card scheme, rather than Visa and Mastercard’s, would help the unbanked market and provide strong competition. Currently Visa and Mastercard have about 48.8 million cards in circulation in South Africa with 5.6 billion transactions annually, with volumes growing strongly, 16.2% between 2018 and 2019.

SARB’s paper is only considering a domestic scheme with fees charged in line with transaction flows across the network. Fees for a domestic only scheme should be lower than if it is international. Other countries, for example Norway, have taken a similar approach.

To succeed, a wide range of stakeholders would need to be involved, hence the consultation. SARB is also trying to establish whether merchant fees are unreasonably high in South Africa.

Further Investment in Airtel’s Mobile Money Operations

Airtel Africa is receiving significant investment at the moment. The Rise Fund recently invested $200 million in Airtel Mobile Commerce (AMC), and now Mastercard is to invest $100 million.

AMC is the holding company for a number of Airtel Africa’s mobile money operations, currently operating in 14 countries. Airtel offers mobile money services including wallet deposits and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit card and international money transfers. Its services are used particularly by the unbanked. At present it has 21 million subscribers and revenues of $110 million.

The Mastercard investment is in two stages, requiring AMC to hold specific assets and contracts in order to release funds.

Mastercard will also extend its commercial agreements with a new business framework which deepens their co-operation to include card issuance, payment gateways, payment processing etc.

Africa Drives Growth in Mobile Money

Mastercard’s investment needs to be seen in the context of the 2021 GSMA ‘State of the Industry Report on Mobile Money’ which has recently been published. As usual, sub-Saharan Africa continues to be the big user of mobile money, but the report is interesting about what has happened in the last year.

With 1.2 billion registered mobile money accounts globally, nearly half of those are in Africa – 562 million. The gap between the number of registered and live accounts continues to be significant; for example, only 161 million of the 562 million accounts in Africa are actually active. In Africa, the number of registered accounts was up 12%, but active accounts were up 18%. Worldwide the number of active accounts was up 17%.

Worldwide there are 310 live mobile money services in 96 countries. 171 of these are in Africa and 157 in sub-Saharan Africa. Africa accounts for nearly two thirds of the global value transacted using mobile money, $495 billion of the $767 billion total.

The report highlights how the pandemic has driven this increase, but also constrained it. Fees were waived in 23 countries and payment limits were increased in 20 to encourage digital spending. Know Your Customer regulations and on-boarding requirements were eased in nine countries with the goal of increasing the number of accounts. Part of the rationale, at least for nine countries, was to allow their governments to distribute pandemic aid using mobile money accounts. At the same time, acting as a brake on the use of mobile money, spending was significantly lower in 2020.

What the pandemic has not changed is the proportion of women who use mobile money. Women remain a third less likely to have an account than men.

Remittances increased 65% during the pandemic, reaching $12.7 billion.

Cash continues to be a major constituent part of mobile payments. Analysis of December 2020 saw 68% of the $25 billion paid into mobile payment platforms being paid in as cash, and 60% being paid out as cash.

Strong Growth in European Contactless Payments

80% of in-store Visa payments are now contactless in Europe, with Visa celebrating reaching its billionth contactless transactions. 40% of those transactions were in the UK, and this is likely to increase when the contactless payment limit is raised to £100 later this year.

The use of contactless payments rose by two thirds in France and a half in Germany year-on-year.

WhatsApp Payment Finally Goes Live in Brazil

The Banco Central do Brasil has now given a licence to Visa, Mastercard and WhatsApp for payments and transfers on WhatsApp.

Nine months ago, WhatsApp tried to launch its P2P payments service but had to suspend the service when the central bank intervened to say they did not have the necessary licenses. It also raised questions about competition and data privacy. At the time this was WhatsApp’s launch of its payment service.

While all this has been going on, the central bank has launched its own PIX instant payment platform covering payments by citizens, companies and government bodies, whether by mobile phone, online banking or at ATMs.