The World Bets on Mobile Payments in Africa

While they have been “business as usual in Asia and South America” for some time, mobile payment (mCommerce) systems are considered to be an emerging technology in the United States. However, their impact is more likely to be felt in Africa and Asia than across America.

Chinese and Indian investments in Africa’s mobile infrastructure and payment systems will provide rural areas greater access to communications and cash, both of which are critical to market development and commerce growth. Bharti Airtel Limited recently acquired Zain Group’s mobile operations in fifteen countries across Africa. Bharti’s intent is to “increase the teledensity from the present 20% to 50% in the next six years” and to “serve the interest of the rural population with affordable but qualitative telephony service in the years ahead.” China Mobile, Ltd. also has stated its intent to increase its presence in Africa, and develop mobile infrastructure in rural areas, according to a recent interview with its Chairman Wang Jianzhou.

Banks have seen mCommerce in Africa as a large emerging opportunity for some time, and are seeking to capitalize on it. Through a partnership with Zain, banks such as National Bank of Malawi (NBM), EcoBank of Niger, Zenith Bank of Sierra Leone and Citibank are facilitating mobile payments in Africa, while European financial services company Societe Generale recently began deploying its mobile payment services.

The African mCommerce market becomes even more complex as payment methods and technologies battle for acceptance. NFC (near field communications) is an emerging technology that allows the user to make a payment via contactless communication with another device. This however requires chipsets that reside within the mobile device. Since users in rural areas are unlikely to own NFC enabled phones, SMS (text messaging) will be the prevalent technology for at least the next several years. This creates a window of opportunity for companies like Obopay, based in Redwood City California. Obopay has partnered with Societe Generale as their payment technology provider in Africa.

If the Chinese are able to gain a strong enough foothold in Africa, part of the continent could be using a payment method that is similar to China Unicom’s “All-In-One-Mobile-Card”, which consists of a phone with an integrated SIMpass™ antenna. SIMpass™, a technology developed by Beijing-based Watchdata, allows a device to be detected when passed over a contactless reader.

Mobile commerce and payment technologies represent economic hope for Africa, which has been struggling to escape its colonial history. The one lingering question is whether Africa’s emerging middle class will expand fast enough to drive a high and sustainable level of mCommerce growth. The good news for those who are building Africa’s mCommerce infrastructure is that they can help answer this question positively by working proactively with African businesses and governments to help create jobs locally.