Must Read of the Week:
At Enclude, we are consistently reviewing key trends that we observe in the digital financial services (DFS) ecosystem. These trends are informed by ongoing conversations with key industry stakeholders (banks, MNOs, regulators, etc.), as well as key market dynamics observed when on-ground in several frontier markets. While we won’t go into the details of the trends currently observed by our team, they are key dynamics that would move the industry’s focus from ‘access’ to ‘uptake’.
Until now, much time and effort in the DFS industry has been (rightly) spent on analyzing ways to increase access to DFS among the world’s un(der)served populations. While there still needs to be focus on improving access globally, the reality is that the channel is facing a key issue to its long-term success: uptake. For example, per GSMA’s latest State of the Industry report, they note the global activity rate of 33% among mobile money users. If, after all the effort to improve access for un(der)served markets, only 1/3 of all mobile money users are regularly using the service, then more effort needs to be spent on increasing the use cases. One such use case is essential to the continuing growth of DFS is merchant payments.
Both Ecobank and MasterCard have also realized that improving the merchant payment use case may unlock a large sector of consumers – after all, merchant payments account for a large portion of household financial activity on an on-going basis. They signed a memorandum of understanding to roll out MasterPass QR, a mobile payment solution that allocates payment through the scanning of a QR code at the merchant location, across 33 African countries. The roll-out, represents one of the largest implementations of a digital payment solution in Africa and is closely aligned with Ecobank’s focus to add 100 million new customers by 2020.
As far as the solution itself, QR presents an interesting case study for merchant payments. Our analysis shows that deployment of a point of sale device can be a costly venture for all parties, especially the merchants themselves who often bear the brunt of the deployment. According to the article, QR represents a much more cost-effective payment solution, hopefully increasing the value proposition to the merchant. Of course, scanning of the QR code also requires the end-user to have a smartphone – something that may initially create a barrier to usage. However, per GSMA, smartphone usage in Africa is anticipated to be 725 million by 2020, so MasterCard and Ecobank are making a long-term bet. It will be interesting to see if it pays off in time.
Read the article here: http://mobilemoneyafrica.com/content.php?id=3114