Visa says mobile is route to transformative banking

In developed and developing markets around the world people are tapping, swiping and dipping cards, phones, watches and even rings to make purchases. In Africa, however, 98% of all transactions are still made in cash.

“Africa as a continent has not lived up to its promise of full financial inclusion for both consumers and SMEs – there is still work to be done, says Andrew Torre, group country manager for Visa, sub-Saharan Africa. “The continent remains a high-potential, low-performance market when it comes to digitised commerce.”

National Treasury’s deputy director-general Ismail Momoniat would probably agree with the statement, as far as it pertains to South Africa. At the first day of public hearings in parliament, held to assess the progress of transformation in the financial services sector, he said the objectives and transformation goals stipulated in the charter were not ambitious enough. “The current BEE regulations do not sufficiently cover things like financial inclusion and access….”

Torre acknowldeges this could be true. “Part of the problem is that we have tried to apply traditional thinking, products, services and solutions to what is a highly complex, fragmented continent that lacks traditional infrastructure to support them.”

This thinking is changing as Visa and peers look to expand their global footprints, embrace digital technology and facilitate a greater shift away from cash-based commerce.

This is a problem that is being felt particularly acutely as government chases its own tail in an exhausting and pitiful circus whose end goal is apparently to ensure that come April 1, 17 million social grants will be paid.

If every South African had their own bank account, grant payments would be a simple process.

Read: The sum of all fears

South Africa’s social grants problem is exacerbated by the fact that Sassa system does not enable interoperability.

Interoperability, which enables the participation of multiple role players, is essential and possible, he says. Last April the Payments Association of South Africa announced that it had released a fully interoperable specification to facilitate biometric authentication on payment cards – apparently the first in the world. This was done in partnership with Mastercard and Visa, and the specification enables a range of biometric solutions, from fingerprint verification to palm, voice, iris, or facial biometrics. “Financial inclusion is too important to be limited by proprietary technology,” he says.

While options are floated, the unbanked population simply resorts to cash, which is inefficient and exposes users to risks such as theft and fire, as many of those in Hout Bay’s Imizamo Yethu would have discovered.

But this is changing. “Banks know they need to change the way they do business and we are seeing this happening with banks onboarding clients digitally – ultimately bringing more people into the financial sector,” says Geraldine Mitchley, Visa’s senior director for emerging payments and innovation.

The mobile phone is transforming the payments space, delivering financial services, at scale, to more people in Africa than ever before.