Africa’s economy holds a lot of promise and growth prospects for international businesses, but one of the continent’s major challenges is its fragmented payments ecosystem. Businesses must offer a complex array of payment methods to meet consumer demands, which poses significant issues for small local businesses, and is multiplied for multinational corporations. For example, an airline operating in Africa needs to receive payments from customers in each of the countries they fly to, but card uptake is low in most destinations, and customers are more likely to pay using mobile money. The treasury team must manage and maintain separate mobile wallets while performing reconciliation and managing customer services through different platforms, all to serve clients with just one payment method in just one country. This administrative burden can become crippling, restricting a company’s growth on the continent or causing a business to reconsider entering African markets.
Thankfully, partnering with fintechs and banks can help businesses expand their reach while limiting their exposure to complex payment systems. Collaborative networks have sprung up within which fintechs have developed pathways to connect corporates and their banks to popular African payment service providers (PSPs), such as the mobile network operators responsible for mobile money wallets. By joining these networks, businesses can complete the loop of key payment stakeholders and offer the full range of payment options to their customer base. Fintechs provide a single entry point for businesses via an application programming interface (API), enabling merchants to receive all their payments facilitated by any provider in the network in one place. This approach facilitates smoother back-office processes and can drive significant time and cost benefits for treasury teams. The same network being used to receive payments can help treasury teams with the payouts the business itself has to make, and these partnerships make it possible for businesses to navigate the manifold regional and cross-border payment regulations across Africa.
While mobile money looks set to remain a central feature of the African payments landscape, there are many cases where bank-fintech collaboration could help change customer behaviours and drive the adoption of simpler payment methods that are more straightforward for both merchants and consumers. Payment by bank transfer is growing in popularity across different markets and has the potential to streamline a number of payment scenarios for businesses and their clients. Consumers can be offered a simpler option – topping up via bank transfer – that still enables them to use their chosen payment method. Following widespread acceptance of this technology, we might even see African consumers turn to paying merchants directly via bank transfer – cutting out a further layer of complexity and reducing transaction charges accordingly.
The collaboration between businesses, fintechs, banks, and payments providers has the potential to streamline payments and the associated back-office processes, solving a huge challenge for treasury teams operating in the region. The African fintech and payments arena is an exciting and innovative space, and forward-thinking businesses can take advantage of innovative technology to support their expansion into African markets. By piecing together the once fragmented ecosystem, businesses can take advantage of the opportunity for treasury teams to overcome these challenges and expand their reach multiple times over. Sike Bamisebi, Chief Business Officer at Cellulant, encourages corporates to partner with fintech.
Source: africamoneydefisummit.com