Big strides to replace cash with digital payments in Africa

Late in 2011, the Bill & Melinda Gates Foundation commissioned pollster Gallup to carry out face-to-face interviews with 1000 adults in a number of sub-Saharan countries (Botswana, DRC, Kenya, Mali, Nigeria, Rwanda, Sierra Leone, South Africa, Uganda, Tanzania, and Zambia). The purpose of the research was to analyse the payments and money transfer behaviour of people in these countries. The report was comprehensive and was published in June 2012. I am not aware of any subsequent research as this would show trends in the findings, but the results of the report still require some analysis. (The report can be downloaded here).

Some of the conclusions that one could draw from the findings are:

• More than half of the people interviewed (effectively representing 134 million people in these countries) had paid someone over a distance (meaning that the payer and the payee were not physically in the same place) in the past month
• The profile of each country surveyed is vastly different. For instance the percentage of people that have made a remote payment varies from 76% (in Kenya) to as low as 24% and 27% (in Rwanda and in Mali)
• Generally, countries with higher percentages have less people sending money in cash. (For instance only 20% of transactions in Kenya are cash-only, where-as 93% of transactions in Mali are cash only)
• The percentage of digital only (account to account transactions, with no conversion to cash) is above 15% in only five countries (Kenya, South Africa, Botswana, DRC and Zambia), whereas others are still very low (3.4% in Sierra Leone and 3.7% in Mali).

I am sure that these results have improved significantly in the about two years since the research have been done, but it is clear that Africa is a country changing into a digital payment world – although much must still be done.

Buy your airline tickets with mobile money

Someone sent me a note highlighting the fact that one can now use EasyPaisa (the leading mobile payment system in Pakistan) to purchase airline tickets on Pakistan Air. I checked and this seems to be the case (Read here). The advantage of this service compared to using PAI booking offices and airline travel agents is that it is available twenty-four hours a day. I found it so fascinating that a payment service designed for low income people could also be used for purchasing airline tickets that I decided to investigate. It turns out that this service is not just offered in Pakistan ....
A similar service is available in Ghana. MTN Mobile Money subscribers who use a Starbow service can now purchase their air tickets through Mobile Money. (Read here). In Tanzania is also possible to purchase airline tickets on Precision Air (a local airline). This service is available to mPesa subscribers and tickets purchased in this way would receive a 20% discount. (Read here). Further research indicated that a similar service is available in Nigeria where tickets on local airline, Aero can be purchased from the U-Mo electronic wallet. (Read here).

It seems that the availability of a flexible, digital payment system can lead to applications that one would not have envisaged initially.

Quality of software platforms for payments - differnt requirements?

The fast changing world of Internet and Mobile applications requires a new type of development approach. In this approach, where subsequent versions of the software are released in short intervals, the emphasis is not to catch out all bugs before release, but to rather fix them quickly after they are found (or reported). The user community then in effect becomes the final quality assurance step in the software cycle. Sometimes referred to as Agile, this is a very effective way to get functionality into the market and then quickly fix anything that is reported by the users of the software and works beautifully for most applications.

Some months ago, a flaw in the Google wallet on Android phones emerged (Read here). This flaw disabled the wallet functionality following a simple factory reset on NFC-equipped Android handsets. It seemed as if the reset trips the secure element in the device and in the process rendering the Wallet functionality useless. This was of course fixed quickly and no money or transaction histories were lost, but it made me think about the suitability of modern development approaches for payment applications.

The potential damages caused by mal-functioning software to money eco-systems and the integrity of payment systems can be devastating to individuals and corporations. Lost or duplicate transactions, money-records that do not balance or that is out of sync with master records, pending transactions without information to resolve payments that have not cleared, slow (or absent) confirmation of payments and user-interfaces that display wrong or inaccurate information are just some of the things that can go wrong.

Agile is without doubt the best way to build software quickly and fast. It is the best way to ensure that results are seen quickly and to allow for less-costly adjustments early in the life-cycle. But, when building payment solutions, one probably needs an additional (traditional), robust quality assurance step prior to releasing it into the wild.