While one might assume that a payments revolution would be a hard thing to miss, as it turns out, it can happen. It all depends on how closely the world is looking — and what exactly it expects to be looking for. Sometimes, DPO Group CEO Eran Feinstein told Karen Webster, a massive paradigmatic shift can fly under the radar, if it looks just different enough from what the world is used to seeing.
Africa, and East Africa specifically, he noted, offer a good example of this. As of today, a little under 13 years after the launch of M-Pesa in Kenya, there are nearly 200 million consumers subscribed to mobile money services. As of today, 80 percent of the population carries a mobile device and by 2025, two-thirds will have a smartphone. The right question to be asking Africa today, he noted, isn’t whether or not mobile is going to ignite or how it will. Those questions have been answered.
The question is how to take those early beginnings and tie that digital money capability and the rapidly growing enthusiasm for it into a broader range of commerce experiences.
“There are hundreds of millions of consumers in Africa that have not so much as touched a shilling, let alone used one to pay, in over a year. No one calls this e-commerce.,” Feinstein said.
But the potential, he said, is there. They’ve seen it since they started working on the ground in Africa in 2006 to develop an online booking system for a small Kenyan airline looking to make themselves more appealing to foreign customers. He’s watched as customers all over Africa have en masse shifted away from a cash economy to rely on the mobile devices in their hands.
The goal is to unlock those hundreds of millions of consumers and free them up to robustly transact online in their local context — and even globally.
“We don’t need to build new technology to do that. The technology is already here. We need to connect it all so that it can be leveraged more broadly,” Feinstein noted.
Thinking Outside Of The Box
Much of making digital payments work more broadly in Africa, he noted, is thinking differently about the context in which they are being used, and what they are replacing. In much of Africa, the payment standard when dealing with delivery items — food from Uber Eats, for example, is cash on delivery. So instead of fighting that, and trying to push consumers in a single step to digital order and pay ahead — what they think about doing instead is making COD compatible with using a mobile money product.
The user has the same experience on the front end that they are basically comfortable with: their good or service arrives and they pay for it. But by switching to a digital mobile money payment, Feinstein noted, they can do a lot more with it on the backend. They can route in a single step part of the payment to the delivery person, part of it to Uber Eats, and part of it to any other operator. It’s a lot cleaner and smoother than that cash payment, improve the process and provides consumers another local context for digital payment.
Or, he noted, another way to better connect the various endpoints is to figure out how to bring existing infrastructure to mobile money.
“It’s why we launched a solution where mobile money can be converted to a virtual prepaid card. It has a 16-digit number and now in a single step that mobile money account can be tied to the entire global card network that can be used to pay anywhere. The infrastructure is out there, we don’t have to invent something new — we need to invent ways to push what is working into that wider arena.”
Because while talking about the future of digitization often dissolves into an argument about whether one needs to think big or small in developing regions like Africa, the truth, Feinstein said, is that is a false dichotomy. The real push going into 2020 and beyond is pushing from both the global and local perspective because the multiplier for fuller ignition in the region is relevance.
The Global, Local Two-Front Push
Consumers in Africa, Feinstein told Webster, are in many ways just like consumers everywhere else. They want Netflix, they want to be able to order from Amazon and they want to be able to access global brands for the same reason everyone else does. That desire pulls them toward the solutions that allow them to tie their mobile money account to a virtual card — it connects them to those services they want.
“Amazon very much wants to be able to address those wants, so does Netflix, but they don’t want to build the infrastructure to tie into dozens of mobile money platforms. One of the main challenges in Africa is having to go country by country to connect to all the local networks with local certifications. It is one hell of a difficult task, and we don’t want them to do it. But we do want them to be able to enter the region.”
And easier path into a market with multiple hundreds of millions of potential customers, he noted, is the path they want.
On the other side of the equation, are the local transportation networks, the “teeny-tiny local grocery stores,” he said, and when one is thinking about how to push consumers to use the digitization of funds technology more widely, these are the daily use merchants that most need to be connected to create habits. Those bridges, he noted, are just as important to build as the ones to the massive global brands like Amazon, because these are the services and shops they are going to use every day.
What those local merchants and services are going to be connected to, he noted, is really a custom question. Today, he noted, what a lot of them are doing is taking mobile money transfers directly to their personal accounts — which is “not good.” The question, he said, is how to connect them to something – which means how to offer them something better. A better way to connect with suppliers, or pay them directly is an option, a way to take more payments from more types of customers is another.
“The point is to connect them to something, to make the mobile money be able to move in ways that are appropriate, secured with tokenization and useful,” Feinstein said.
Digital money isn’t the future in Africa, Feinstein said, in many ways it is the present for an increasing body of consumers. The question isn’t how to persuade them to use the service, they already are, it is to build the right connections and get out of the way.
“We can see on the ground how quickly consumers are adopting this, there is no question about the potential. The question is about what are the best access point to unlock first to help it live up to its potential.”