For many of us in the west, card terminals are ubiquitous. But in South Africa, only 7% of businesses are ready to accept card payments, despite a card penetration rate amongst consumers of 75%, according to reports.
Most famous for pioneering mobile payments in the likes of M-Pesa, Africa represents a new ‘next’ frontier for fintechs, especially on the payments front. Consumer spending is reported to be over $1.4 trillion across the continent, and over 1 million small businesses exist, that could be addressed by services like Yoco.
But it isn’t just Yoco innovating. Even the central bank is in on the payments innovation game – the blockchain one. Project Khokha, an Ethereum based DLT system between participating banks for a wholesale payments system picked up an award this week for Best Distributed Ledger Initiative, from Central Banking, a global central banking forum.
This openness to testing blockchain could be a sign of further digital currency developments in the works. While Zimbabwe has attempted to ban cryptocurrency trading, South Africa seems to be taking a more lenient approach. A few months back the first cryptocurrency ATM was reported to have been installed in Johannesburg.
Where to next for Africa? Well, for those interested in the space, keeping tabs on these startups is probably worthwhile:
MaTontine – The startup digitizes a centuries old practice of communal savings groups, called tontines. A tontine is an investment plan devised in the 17th century that combines features of an annuity and a lottery.
Piggybank.ng – a simple savings app with a feature that allows you to lock all or parts of your savings up and receive instant upfront interest.
Numidia – an unsecured lending app who’s proprietary algorithm merges cash flow and financial behavioural data insights to determine credit-worthiness.
There is plenty of scope for fintech growth in Africa, and many ideas that may have reverse applicability in transformed ways back in the West. The country is the leader in ‘microfintech’ in many respects, a trend that is growing in more developed countries as millennials adopt microinvesting and fractionalized fintech offerings. Lot’s to learn indeed.
Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.