Top payment methods in Nigeria, South Africa, Ghana, Egypt: Advancing digital innovation in Africa

Have you ever wondered what might be the implications if Africa lags in the global financial technology innovation race? The answer is that Africa could miss out on significant economic growth, greater financial inclusion, and enhanced business efficiencies. Outdated and cumbersome payment processes could leave consumers and businesses struggling, while the rest of the world advances.

Yet, Africa's e-payments market is projected to grow by 20% annually, reaching around USD 40 billion by 2025. This means that for now, the region has a steady pace in the digital innovation “department”. To understand where this drive comes from and have a better picture on Africa’s financial landscape, let's delve into the most popular payment methods in Nigeria, Ghana, South Africa, and Egypt, and see how banks and merchants can provide top-notch services and enjoy smoother transactions.

Africa's digital payment landscape: A comprehensive overview

One factor for the digital payments growth that Africa presents is its young, urbanized demographic and technological trends. More precisely, this preference for digital innovation stems from an audience with a median age of just 20 years, and the fastest population growth rate in the world that stands at 2.7% annually.

This young generation offers fertile ground for more modern payment methods and technologies like mobile account transactions. In 2023, there were 1.75 billion registered mobile accounts globally, a 12% increase from the previous year, out of which 856 million accounts were registered in Africa alone. The shift towards mobile-based financial solutions is also demonstrated by an impressive 62 billion in transaction volume.

The integrated universal QR codes is another innovative technology that contributes to Africa's accelerated digitalization. For instance, GHQR in Ghana and NQR (Quick Response service) in Nigeria enable effortless payments from bank accounts, mobile money, and cards. Needless to mention the interoperability between competing mobile wallets achieved in most countries has contributed to a smoother transaction process across different platforms.

In addition, real-time payments infrastructures have gain momentum, with Nigeria being in the global top ten for real-time transactions, and Kenya being projected among the fastest-growing countries for real-time payments. In Egypt and Ghana instant payment regulations and systems have already been introduced, while Tanzania is following suit with embedded real-time payment capabilities. The South African real-time payments market, valued at USD 11.44 billion in 2021, is expected to reach USD 25.90 billion by 2026, with a compound annual growth rate (CAGR) of 17.8%.

Bank and non-bank solutions are also thriving in this environment, as Ghana provides tailored licenses to various financial entities, and Egypt employs a bank-led model requiring fintechs and PSPs to partner with banks. On top of that, Egypt facilitates financial inclusion through its tiered KYC system and gender-inclusive national ID cards.

Via Open Banking, different business models are enabled to integrate with legacy banking systems, which reduces the cost of developing, launching, and servicing products. This approach opens the perfect opportunities for merchants to create customized, affordable solutions.

For banks, these developments present numerous benefits:

• Leveraging existing infrastructure to capture the offline payments market.
• Integrating lending and other products into customer journeys and third-party platforms through embedded finance.
• Providing payments-as-a-service to enhance capabilities and serve as a comprehensive growth platform for innovators.
• Creating ecosystems that integrate customer transaction capabilities across multiple sectors.

Driving digital innovation in Nigeria: 8 key factors

1. One of Nigeria's notable advancements is the Instant Payment (NIP) system developed by the Nigeria Inter-Bank Settlement System Plc (NIBSS). Launched in 2011, NIP has become Africa's largest instant payment service and ranks among the top six worldwide. This system facilitates real-time bank transfers and has expanded to encompass 22 commercial banks, 20 microfinance banks, and 6 mobile money operators. It is integrated into multiple channels, including internet banking, mobile apps, USSD (Unstructured Supplementary Service Data), POS systems, and ATMs.
2. Nigeria is also advancing in Open Banking, standardizing API access to enable seamless integration and spur innovation. The Nigeria Inter-Bank Settlement System (NIBSS) is pivotal in this initiative, particularly by facilitating government-to-person (G2P) payments. NIBSS hosts and validates transactions for all government social intervention programs, ensuring efficient and secure payment processes.
3. Nigerian mobile payments and USSD codes are increasingly popular. Services like Paga and Opay have boosted mobile payment volumes due to the adoption of fintech solutions and the growth of smartphone usage. USSD codes continue to be an essential transaction method, especially in areas with limited internet access, providing a reliable and efficient means for financial transactions.
4. Debit and credit cards, mainly from Visa and Mastercard, are widely utilized for both online and offline purchases in Nigeria. The growing business acceptance of card payments enhances accessibility and use throughout the country.
5. Bank transfers, facilitated by internet banking and mobile apps, are favored for their simplicity in moving funds and effectiveness in completing transactions.
6. Online payment gateways have revolutionized eCommerce in Nigeria, simplifying the process for businesses to accept payments and enabling consumers to complete online purchases effortlessly.
7. QR code payments are gaining traction as a swift and contactless transaction method. The 2021 launch of the New Quick Response (NQR) platform has made these payments more accessible and widely adopted across the country.
8. eWallets, such as Kuda Bank, deliver seamless digital banking solutions, enhancing user accessibility and improving the overall banking experience.

Revolutionizing transactions in Ghana: 6 breakthroughs

1. In Ghana, mobile money has emerged as the foremost payment method, with services like MTN Mobile Money becoming integral to everyday transactions. In 2023, mobile money transactions soared to GH¢1.912 trillion, marking an impressive 82% rise from GH¢1.07 trillion in 2022. The first quarter of 2024 alone saw transactions reach GH¢779.1 billion, reflecting a 41.55% growth compared to the same period the previous year. The mobile money sector is projected to expand at a compound annual growth rate (CAGR) of 19.2% between 2024 and 2032, potentially achieving a market size of USD 789.5 billion by 2032.
2. Key digital wallets and internet banking platforms such as GTPay, ExpressPay, Interpay, and Myghpay are playing a crucial role in offering a wide range of online payment options, significantly improving the efficiency and accessibility of digital transactions.
3. The GHQR system, which utilizes QR codes for payments, is gaining popularity for its ability to facilitate immediate, no-fee transactions. This method provides a seamless, contactless payment experience, benefiting both consumers and businesses by speeding up transaction times and improving the overall efficiency of financial operations in Ghana.
4. Blockchain technology is rapidly becoming a key tool for enabling instantaneous and zero-cost money transfers. By utilizing decentralized networks and advanced cryptographic techniques, blockchain ensures secure and efficient transactions. This technology boosts transparency, slashes transaction fees, and speeds up financial exchanges, providing valuable advantages to both individuals and businesses in search of dependable and economical payment solutions.
5. The USD Global Wallet is revolutionizing cross-border money transfers and financial services for Ghana, improving global financial connectivity. This service enables individuals and businesses in Ghana to conduct international transactions with ease, fostering economic growth and strengthening global trade relationships. All these link Ghanaian users with international financial markets, broadening opportunities for economic engagement and financial inclusion on a global scale.
6. Digital platforms have transformed routine transactions by providing effortless solutions for utility payments, internet subscriptions, and airtime top-ups. These platforms streamline financial management, allowing users to handle bills and access essential services with ease online. This enhanced accessibility not only improves the user experience but also boosts financial efficiency and encourages broader digital adoption across different sectors of the economy.

Transforming South Africa's digital economy: 3 payment methods

1. In South Africa, debit and credit cards are central to the payment ecosystem, widely adopted for both online and in-person transactions. As of March 2024, debit cards have become the leading online payment method, representing 58% of transactions, while credit cards made up 41% of eCommerce purchases in January 2020. The widespread preference for card payments is driven by their convenience, robust security features, and the familiarity they offer to consumers. Transactions are protected by encryption and customer liability coverage, making them a trusted and popular choice among South Africans.
2. By January 2020, bank transfers accounted for 20% of eCommerce transactions in the region. This payment method is favored by consumers who value direct control over their financial activities. Bank transfers enable users to move funds directly from their bank accounts to merchants, eliminating the need to share sensitive financial details online and enhancing security.
3. The rising adoption of eWallets in South Africa with platforms like SnapScan and Zapper underscores the country's commitment to provide a user-friendly and secure means of managing payment information and executing transactions with just a few taps on a mobile device. These digital wallets accommodate diverse needs and preferences, integrating effortlessly into the tech-savvy lifestyle of contemporary South Africans.

Shaping Egypt's payments future: 3 digital solutions

1. In Egypt, mobile platforms such as Vodafone Cash and Orange Money have gained significant popularity for digital transactions, as mobile wallets offer a convenient and secure way to manage payments, allowing users to perform transactions without relying on physical cash. Their extensive adoption highlights a rising trend among Egyptian consumers towards mobile-based financial services.
2. The use of credit and debit cards is widespread, with institutions like CIB (Commercial International Bank) providing advanced online payment solutions. The extensive adoption of bank cards in Egypt, as well as in other major markets like Morocco and South Africa, plays an important role in strengthening the digital payment infrastructure. This widespread card usage facilitates smooth online and offline transactions, enhancing the revenue streams for financial institutions.
3. The adoption of eWallets, payment networks, and internet banking in Egypt is on the rise, thanks to their convenience and transaction security. Digital payment platforms have experienced significant annual growth, fueled by efforts from both governmental and private sectors to advance financial inclusion and encourage digital transactions. Additionally, electronic payment networks like Fawry have gained traction due to their user-friendly and secure transaction capabilities.