A report on the changing trends in the payment system identified cryptocurrency adoption, the introduction of central bank digital currencies (CBDCs) and the popularity of mobile wallets as major threats to the dominance of cash in African business transactions.
The report by Cellulant said the dominance of cash is being challenged by several exciting trends emerging that will shape the way businesses and consumers process payments worldwide, including in Africa.
“Currently, this system is going through radical changes that are transforming how individuals and businesses send and receive money.
Furthermore, several exciting trends are emerging that will shape the way businesses and consumers process payments worldwide. From cryptocurrency and contactless transactions to artificial intelligence, these innovations are set to transform the industry as we know it,” the report stated.
The firm estimated that the global payments market would record growth of $612.04 billion at a compound annual growth rate (CAGR) of 8.9 per cent.
By 2027, the market is expected to hit $847.59 billion at a CAGR of about 8.5 per cent as more people embrace alternative payment platforms on the strength of an increase in the security of the space, reliability and speed.
“There is an increased focus on security and data privacy regarding payment processing. For instance, financial institutions are implementing more robust authentication processes to protect against fraud as well as introducing new technologies such as biometrics and blockchain to strengthen security,” the report noted.
It picked M-Pesa in Kenya, MTN Mobile Money in Ghana and Tingg as some of the gateways that are sharpening the ways money is sent and received across Africa, saying the continent is at the forefront of smart payment development.
It added: “What’s more, new technologies and trends in global payment processing are reshaping the continent, making it easier for businesses to trade with each other and with the rest of the world. One of the most significant changes is the growth of mobile money. Equally important, more and more people in Africa are using their phones to send and receive payments.”
It pointed out blockchain technology as a key trend reshaping the African payments market, insisting that the removal of middlemen in the chain has increased the speed and cost efficiency of using blockchain for payment settlement. The emerging technology, it predicted, could potentially revolutionise
African economies, making it easier to “move money around without losing value through exchange rates or fees. These trends are just some ways that global payment processing is changing Africa. They are making it easier for businesses to trade with each other and connect with the rest of the world.”
Whereas the death of money, as long predicted by some experts, has not happened, the report said an increasing number of businesses and individuals are moving away from cash transactions.