French multinational telecommunication company, Orange and pan-African banking group Ecobank recently launched a bank-to-wallet transfer service linked to Orange Money subscribers who also have bank accounts with Ecobank to transfer money between their respective accounts. This service rolled out in Côte d’Ivoire, Guinea Conakry and Niger shows the growing development in mobile payment across Africa.
Mobile phones have proven to be potential game-changers in boosting access to financial products and services to people in Africa. It has often been appraised based on its contribution to ‘banking the unbanked’, but mobile money has achieved much more, it has saved the continent nearly $2 billion previously lost annually to inefficient money transfers.
Prior to the launch of mobile money by MPESA in 2007, money was transferred in the form of airtime to the beneficiary who in turn sells the airtime in exchange for cash. This is due to the fact that they didn’t have bank accounts.
Bill Gates, in 2015, made a big bet that by 2030, almost everyone will have a mobile money account. He also said that “Not having access to a range of cheap and easy financial services makes it much more difficult to be poor.”
According to reports, more people have mobile money accounts than bank accounts in at least nine African countries, up from four in 2012. Africa, as a whole, leads the world in the adoption of financial services on the mobile platform.
In Ghana, Rwanda and Uganda, mobile service provider MTN has taken the lead by providing ATMs where customers can withdraw cash from their MTN Money accounts without a bank card (they send a message, then receive a one-time-use PIN on their phone). Other mobile service operators are also vying to release innovations to help customers pay for things without cash, receive money from abroad, and obtain micro loans and insurance products.
This growth in mobile payment in Africa is driven by several factors, one of which is the desire for financial inclusion. Africa’s unbanked majority needs access to affordable tools for savings, loans and credit. The other is the introduction of cashless policies from regulators in countries such as Ghana, Kenya and Nigeria. The low consumer confidence in traditional financial institutions have also made it a suitable moment for new players to enter the solution space.
The recent development by Orange and Ecobank will see over 16 million customers use their mobile phones to securely transfer money between accounts at any time, without the need to go to a distribution point or to have any physical cash. Ecobank customers can also view bank account balance and obtain mini-statements by SMS via the service.
“This easy-to-use system meets the demands of customers who already have a bank account and who want to use their mobile phones to carry out bank operations, wherever they are in the country and at whatever time of day. Customers will also benefit from the extensive network of thousands of licensed Orange Money vendors in addition to Ecobank’s own high-street branches, considerably increasing the number of withdrawal points. We are happy to deploy this partnership in large scale,” said Thierry Millet, Director of Orange Money, Mobile Payment and Contactless.
Orange Money is currently available in 14 countries in Africa and the Middle East. With close to 8 billion euros exchanged over the course of 2015 and over 16 million customers.