It doesn’t take a crystal ball to know that credit card usage in Africa is about to increase significantly. The credit card companies themselves are investing heavily in cashlessness in Africa. Such a financial eco-system is appealing to them, and they are hedging their bets between government deals and “small-scale retail.” As MasterCard's sub-Saharan Africa executive Daniel Monehin explained, “The business needs public-private partnerships to make financial inclusion actionable and sustainable.”
Though it has improved in recent years, the current reality is far from ideal for wide scale credit card usage in Africa. African consumers are still hesitant to adopt a credit-card-based financial system. First, this is due to the fact that approximately 80% of Africans do not have bank accounts or easy access to bank-issued credit and debit cards. Secondly, it is also because high credit card fraud rates in the region make people hesitant jump on the credit card bandwagon.
It is in the best interest of Africa and the African people to let credit cards in. The credit card companies are doing their share with a push to penetrate the region, but we must do our share, with this three-pronged effort, for their endeavor to succeed and bring credit cards into the mix of electronic payments in Africa.
Emannuel Jal said that “if we invest in education, we will be able to change Africa.” As it relates to credit cards, this must be a team effort. In each country, the government, the credit card companies, and the payment service provider must work together to educate the public.
Creating campaigns to educate people about credit card usage in Africa will be challenging due to a prevalence of the cash culture, low literacy levels, high aversion to technology, major concerns around security and fraud, and a general lack of trust in the banking system.
We need a strategy for attacking each of these barriers. Luckily, the great Nelson Mandela gave us a perfect weapon for this attack when he said, “Education is the most powerful weapon which you can use to change the world.”
While education will be key in gaining public approval for cashlessness in Africa, we also need to fix our infrastructure. Electronic payments in Africa can only be as strong as the weakest point in the information and communications technology that supports them.
Some may argue that governments must step up to upgrade Africa’s rudimentary technological infrastructure. Others contend that the credit card companies that will profit from credit card usage in Africa should foot the bill. Perhaps a solution will come in a collaboration of sorts with both parties stepping up to create the opportunity for prosperity.
By no means is it only the responsibility of government, credit card companies, and payment service providers to ensure successful integration of credit cards. As merchants, African businesses must also do their part. In retail locations, merchants must begin accepting and encouraging credit card payments. When it comes to online payments, they must also offer systems that are secure, user-friendly, and compliant.
No small feat, especially for merchants that are used to operating a cash business, but merchant account services exist to serve and support businesses as they integrate credit cards, online payments, and mobile payment solutions.
When selecting a payment processing service, businesses must find one that has partnered with a bank that works with Visa and MasterCard so that they can get merchant accounts and be able to process the credit card payments. The PSP should also have PCI DSS Level 1 certification and offer an end-to-end platform that supports real-time credit card payments and other merchant account services.
Will the credit card boom fix everything?
The impending credit card boom is an enormous financial opportunity for Africa. As we predicted in this blog post, “in 2016, locals and tourists in Africa will increase their dependence on credit cards.” Africa is a glorious place, but it has its share of tough problems. Certainly, success on all three elements described above will be a precursor to success of credit card usage in Africa and a more stable economy in the years to come.
3G Direct Pay holds monthly educational seminars for merchants in the region. The last seminar was held in Livingstone, Zambia, and the next one will be in Rwanda. If you are interested in attending, please contact us.