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The transition from cash-based economies to cashless transactions is rapidly unfolding across Africa, spurred by favorable regulatory environments, technological advancements, and shifting consumer behaviors.

For almost a hundred thousand years, barter systems have existed. Most experts agree that the first evidence of money use dates back to three thousand years before Christ in Mesopotamia, with imprinted coins developed approximately 600 years BC. Today, the globe is moving away from cash-based economies and toward online transactions. According to publicly available data, cash transactions declined by 17% per year after 2017, with countries around the world experiencing a large drop during and after the COVID-19 pandemic. In 2020, the United Kingdom saw a 35% decline in coin/note use, demonstrating how swiftly developed regions are transitioning to cashless economies.

This global trend has not bypassed Africa. The e-payments ecosystem is likewise changing dramatically in the world’s second-most populous region. The confluence of a favorable regulatory environment and technical breakthroughs is driving this progress on the Mother Continent. Naturally, this is occurring together with shifting customer behavior. In recent years, African telecoms firms have emerged as important transaction participants. They have taken on this responsibility by using their huge networks to pioneer mobile financial services.

As a result, fintech in Africa has grown dramatically, as evidenced by the fact that 60% of venture capital exceeding $200,000 goes to the country’s fintech startups. This indicates that foreign and domestic investors see unexplored potential and favorable market dynamics for many. Furthermore, the regulatory framework is shifting to promote financial inclusion. A stunning number of businesses are embracing Know Your Customer criteria, which supports this conclusion. Some attribute this mostly to the rise of credit card casinos in the region, as well as an increasing number of enterprises studying open-banking legislation to speed digitization. Collaborative efforts, such as the Pan-African Payment and Settlement System, have also improved cross-border trade. They have increased the acceptance of alternative banking methods, and we will take a quick look at Africa’s growing e-payment market below.

Africa Is Becoming the Digital Payment Leader.
That’s a fact. In recent years, Uganda, Rwanda, Kenya, Sierra Leone, and Senegal have proposed various policy frameworks for economic digital transformation. As a result, these and other countries have established institutions critical to the development and scaling of digital public infrastructure, and Africa is expected to receive 70% of all mobile money transactions globally. However, it should be noted that the fintech business is seeing unequal growth, with South Africa, Nigeria, Kenya, Ghana, and Egypt accounting for the lion’s share of the mobile payment pool.

Opportunities for E-payment Growth in Africa
Multiple high-end financial consultancy firms see Africa as a promising market for fintech expansion. That opinion is largely based on the country’s increasing middle class. The African Development Bank Group forecasts that the number of Africans with middle-class incomes would reach 1.1 billion by 2030, a startling threefold rise from 2015. The DBG cites this figure as the primary driver of the developing e-payment business. That is because this demographic is extremely likely to accept it soon.

As previously said, mobile commerce and technology also drive this transaction industry. The GSMA said that Africa had 1.2 billion registered mobile money accounts. That equals the continent’s population. It should be mentioned that Euromonitor International forecasts that transactions totaling more than $600 billion will take place in 2022 in the sub-Saharan region alone.

Technological advancements such as AI, apps, and blockchains are projected to help this money transfer area grow more powerful and robust.

The most common digital payment methods used
Despite all of the foregoing, cash remains the most popular payment method in Africa, owing to the scarcity of credit/debit cards.

It is important to note that each African country has its own e-wallet and mobile payment systems. For example, in Egypt, Fawry is a digital wallet service that the Central Bank of Egypt recommends for paying utility bills. In South Africa, Zapper is a popular transaction type. It is touted as a secure and rapid payment alternative for Rainbow Nation citizens.

Paystack and Flutterwave have also made significant gains in this market as African picks, while Skrill and PayPal have done the same as internationally available options.

E-payment Challenges in Africa
Despite the fact that the value of e-payments in Africa will top $195 billion by 2023, the World Bank says more infrastructure is needed in many nations. The organization backs up its allegation with figures indicating that only 40% of Africans have Internet connection, and 550 million still require digital identification. Furthermore, according to the World Economic Forum, 54% of Africans are concerned about how their data will be used when they share it online.

There is also a dearth of information about digital payments in Africa, and most of the continent’s residents are concerned about the hefty fees that typically accompany employing methods that fall into this category, as well as fraud issues.

To summarize
Without a doubt, Africa’s e-payment business has grown in tandem with the worldwide transition to cashless transactions, owing mostly to a fresh legislative environment and technology advancements. E-commerce and online gambling have greatly increased the number of consumers willing to accept new payment methods. As a result of the expanding African middle class and forthcoming technological breakthroughs, currency will most certainly become extinct in this century, including in Africa.