Article by Pier-André Doyon
If you have been living in China for a while, you must have encountered WeChat wallet and Alipay, the now omnipresent mobile payment solutions that are quickly turning China into a cashless society. In the West, ApplePay seems to take hold slower. There is another place in the world, however, where mobile payment is big. Each country of East Africa offers mobile payment solutions. Let’s have a look and see where African technologies might take us.
A technology adapted to the African context
In East Africa, seeing someone with two phones is a common sight. Generally, people will have a smart phone and a dumb phone – that is, a phone with a nearly monochrome screen and a numpad, like the West used to have 10 years ago. African consumers prefer it in this way as those simpler phones are often sturdier and have a much better battery autonomy in a context where power shortage are frequent. It also allows them to subscribe to voice plans only on one phone and use their smart phone for wifi or pre-paid data blocks. Some people might also not have the financial means to afford having two phones and prefer having only a dumb phone.
As such, mobile payment companies had to offer a solution that would be accessible on all kinds of phone. This meant that it couldn’t rely on Tap & Pay technologies or QR codes, like in China.
A second obstacle that had to be considered is that many people around here don’t have or can’t afford to have a bank account, so the technology offered would have to be independent of the banking system nor linked to a credit card account.
The solution they came up with would be a text-message based service. Basically, when you want to use the mobile payment services, you dial in a number and choose options according to numbers. Validation is done through a PIN number and information transmitted to mobile companies, which archive who gets the money and who sent it. Most services also require signing into a logbook at a physical location.
How does it work?
First, you need to acquire a SIM card and phone number from one of the companies that offer mobile payment services. Amongst others, the biggest are MTN in Uganda, Telcom in Rwanda, Tigo in Tanzania, Lumitel in Burundi and Mpesa by Safaricom in Kenya.
Once set up with a registered SIM card, which require visiting a service centre passport in hand, customers can activate the mobile payment services. These services are offered indiscriminately to locals and foreigners.
The money one puts in a mobile payment is topped up in physical locations. They are literally everywhere. Most convenience stores, shops, restaurants and dedicated kiosks in even the most remote cities will accept money deposits. A customer brings cash to such a counter and the retailer provides you with a number with which one can deposit the money in your account. A text message is then received, informing the customer of his new balance.
The array of services offered through these mobiles payments is quite extensive. Long-distance money transfer, shop payments, utility bill payments, phone top-up and packages, tax payments (mobile payment being the only way to pay the pesky social media tax in Uganda) and so on.
The system is extremely easy to use and usually in English, except for Tanzania where it is in Swahili. It is also used on websites for ticket purchases, where credit cards would be used in other parts of the world.
While it is truly adapted to the east African situation, this technology also comes with its drawbacks when compared to Alipay. First, it is reliant on a SIM card and mobile network. If one leaves their country or zone of coverage, he or she won’t be able to use the system. Also, since each account is linked to a phone number, losing one’s phone can be truly problematic (some recovery options are available at service centres, but are a hassle)
Differences between countries
Kenya is the country where mobile payments are the most implemented. Safaricom, with its Mpesa service, is ruling over here. Around here, people use Mpesa more than hard currency. One will struggle to find any restaurant or shop which doesn’t show a small poster showing you this shop Mpesa number, used to pay for the goods or services you purchase. Even small tables by the road selling peanuts will have their Mpesa number. It is quite convenient since using hard currency in Kenya can sometimes be quite awkward, with prices being hard to pay using the available bills and change often lacking.
Kenya is also the country where mobile payment have taken over the internet the most. One can book and pay luxury long-distances buses such as Modern Coast and Mash on their website using Mpesa. Same goes for the Madaraka, the train linking Mombasa and Kenya (which eventually will go all the way to Kigali).
If you tried to count how many times in a day you saw the word Mpesa or Safaricom around this country, you would probably reach thousands, as the company is sponsoring almost every business sign and coat of paint over here.
Uganda, Tanzania and Rwanda
Uganda, Tanzania and Rwanda are in a similar situation. Here, most people use the mobile payment services to pay utility bills such as phone, television and electricity but don’t really use it for goods yet. Some shops offer it, but it is not as omnipresent as Alipay in China or Mpesa in Kenya.
In those countries where employment can sometimes be elusive and people left in precarious situations, mobile payment constitute a true lifeline for some. Mobile payment allow people around here to borrow and lend money almost instantly from and to distant relatives.
Burundi being in the top ten poorest countries in the world, one can easily guess that mobile money payment solutions are not as widespread here as other countries of the East African Community. Most people rely on hard currency, often in a terrible state, to conduct their transactions. However, Lumitel offers a mobile payment option, which well-off people use to top up their phones mostly. Bundles of data and voice are sold in hourly, daily, weekly and monthly packages, meaning that one can buy the data he or she needs for the next hour at a very cheap price, when the need arises.
Overall, East Africa has embraced the mobile payment phenomenon with gusto. Whilst not yet at the levels of China, it’s more than possible to go cashless in a great many places.
Pier-André Doyon works as an international travel guide for YPT. Scuba diving, language and Maoist karaoke aficionado, Pier is travelling around hoping to create stories in all 193 countries of the world.