The payments landscape in Sub-Saharan Africa should be examined to understand the role and potential of digital payments in enabling trade on the continent. Two areas can accelerate value for trade in the region: interoperability and cross-border transactions.

Adoption of digital payments has increased in the past 12 months. Rapid change was experienced during the pandemic, when consumers stayed at home due to various lockdown restrictions and merchants were challenged to find new ways of operating. According to the Visa Covid-19 Cemea Impact Tracker, contactless payments and e-commerce shopping grew exponentially, with merchants and consumers showing sustained preference for digital payments. 

The evolving payments industry combines a wide variety of financial industry stakeholders, including fintechs, banks and telecommunication companies. Interoperability is key to the sustained growth of the industry and fosters a harmonious, digitally connected ecosystem that benefits economies. This is even more critical in a region such as Sub-Saharan Africa, with its vibrant mix of traditional and new players that can help solve some of the continent’s most stubborn financial service challenges.

The following areas should be prioritised to realise the true benefits of interoperability:

  • Regulation that offers a clear approach in areas such as risk management, safety and security standards, fair and open access to interoperable solutions, and consumer protection.
  • The development of resilient infrastructure that is in line with international best practice.
  • Initiatives that accelerate digitisation of payments and drive access to market relevant solutions for all.

Our strategy is to open our network to support a broad range of players that are developing new commerce experiences and transitioning to digital channels. We do this in several ways, including investment, partnership and engagement. There are many examples of work we have done in various countries on the continent to support our strategy in these areas.

We have worked with traditional and new financial services companies to develop new products and capabilities to reach the underserved and underbanked consumers. We are also continuing to foster simple and easier acceptance of digital payments for merchants, with more than 40 partners across Sub-Saharan Africa.

We are always looking at removing the friction that sometimes comes with digital payment experiences by enabling the next generation of connected devices with recent launches of solutions such as “tap-to-phone” in SA.

Regarding enabling and realising the potential of international payments, cross-border transactions have opened the door to a world of opportunity for many businesses, including ours. E-commerce is a solution that enables intraregional trade, and according to new research as part of the Visa Global Merchant e-Commerce Study, a large majority (87%) of merchants believe expanding online sales into new markets is one of their company’s biggest growth opportunities.

As technology pushes the pace of innovation faster, all retailers can seize the opportunity to become more relevant to potential buyers globally. In Africa e-commerce trade remains small and regulations have not kept pace with digital developments. Given some of the challenges, we need to ensure that intraregional trade fulfils its promise of spurring economic growth, attracting investment, and supporting the national development goals in Africa.

Creating the right environment domestically — including one that enables competition and fosters responsible innovation — is a good starting point but given the inherent interconnectedness of the digital economy this alone is not enough. As an ecosystem we need to continue to engage to ensure local enterprises are not denied the benefits of the global reach of the internet, especially in those countries still challenged in enabling digital commerce. 

For Sub-Saharan Africa to realise the full potential of digitisation the region will have to focus on the following:

  • Creating the right environment domestically, including one that enables competition and fosters responsible innovation.
  • Governments continuing to play a key role in facilitating digital trade, both at a macro level through trade agreements such as the African Continental Free-Trade Agreement but also at a micro level by enabling regulations that support economic formalisation, making it easier for segments such as small and medium enterprises to be on-boarded by digital payment services providers.
  • Using the opportunities to bring our perspectives, influence outcomes and ensure the benefits of digital trade are widely shared.

• Diarra is senior vice-president and head of Sub-Saharan Africa at Visa.

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