Towards a cashless Africa

PUBLISHED: Thu, 05 Jan 2017 14:57:15 GMT

Daniel Monehin, Division President for Sub-Saharan Africa, Mastercard, shares insights on Africa’s digital transformation, and its work in Rwanda, creating a new payment ecosystem. The interview below first appeared in Forbes Africa and is republished with its permission. Subscribe today by contacting Shanna Jacobsen [email protected]

Leading Mastercard’s business across sub-Saharan Africa as Division President, Daniel Monehin is primarily focused on establishing Mastercard’s brand presence, deploying innovative payment solutions and partnering with governments and market regulators. Passionate about making the lives of people around him better, his community-focused volunteer efforts are based on leadership development among the youth, entrepreneurs and professionals. Here, he speaks to FORBES AFRICA:

Q: With the growing number of incubators in Africa that are churning out newer and newer propositions on the payments and remittance side, what is Mastercard’s strategy to protect traditional income lines?

It is an exciting time to be working in Africa, with the public sector and other key stakeholders willing to adopt technology to advance the move away from inefficient cash to a digital payment ecosystem. Mastercard does not view our place in the move towards a ‘cashless Africa’ as being solely in the traditional card space, no – we view our role as a technology company to explore and implement cutting-edge solutions that will meet the needs of economies across the continent, better servicing all citizens.

At Mastercard, we don’t limit our thinking to ‘traditional’ vs. ‘new’ – we explore what is going to meet the needs of a market and its citizens as there is not one solution that can meet all needs. Rather our focus is on creating a ‘world beyond cash’, developed through partnerships and driven by advances in technology.

We get excited about start-ups challenging the status quo, and in fact we have developed our very own Mastercard Labs for Financial Inclusion that is based in Nairobi.

The purpose of the Labs is to drive innovation that meets the various needs across the continent, with specific focus right now on East Africa. Great advances are being made in this space, and it is very much a collaboration with NGOs, local financial institutions and anyone able to provide insight that will feed the development of smart and practical solutions.

The remittance space, for example, is an environment we have solid experience in and are extremely excited about – we do a great deal of work in this area with HomeSend. Launched in 2014, HomeSend is a joint venture of Mastercard, eServGlobal and BICS that enables business to business cross-border and cross-network transfers. Consumers can send money to and from mobile money accounts, payment cards, bank accounts and cash outlets, regardless of their location or that of the recipient.

Recently, we announced a partnership with the Commercial Bank of Ethiopia (CBE) to introduce the remittance solution to more than 100 million Ethiopians, empowering them with a safe and easy to use solution directly from their mobile device.

With advances in the payment industry, it is also still very important for us to develop partnership to roll-out full suites of digital payment solutions, including prepaid, debit and credit cards. This year alone, we have seen significant partnerships being forged with the likes of United Bank Africa (UBA) that will impact 18 new markets on the continent.

However, we are also working with our partners to drill down deeper into specific markets – recently announcing a collaboration with Guaranty Trust Bank Rwanda Ltd. Besides the Platinum and Classic debit cards being introduced, we are also introducing the first student card (GTCrea8) to the market to educate the youth on the importance of going cashless and also saving. The partnership will also result in SecureCode being introduced to the market – a solution focused on protecting online payments.

Q: How big is the cash economy in Africa, and Rwanda specifically, where you have a tie-up with the government?

According to a recent McKinsey Report, two billion people remain outside of the formal economy.

Various studies confirm that over 90% of retail transactions in sub-Saharan Africa are in cash. In Rwanda, only 42% of adults own a financial account, whether formal or informal, and a total of 1.6 million people have opened accounts in the country’s national SACCO savings and loan programme.

We know that government cannot achieve financial inclusion alone, and neither can the private sector – we need to work together. Rwanda is one of our key markets and to highlight this, we partnered with the Rwanda Development Board (RDB) to drive financial inclusion. The collaboration with the Rwandan government aims to address common challenges faced by poor and remote populations, such as the lack of financial identification and financial illiteracy.

Q: What are Mastercard’s efforts to convert cash to electronic?

Our work in Rwanda:In May, the Rwandan government announced a partnership with Mastercard which aims to fast-track the country’s move to include 90% of its citizens in the financial mainstream, as set out in its Vision 2020 strategy. Read more here. These solutions will include the digitization of school fees and national healthcare claim payments, providing an online payment gateway for RwandaOnline, contributing to the creation of a common mobile banking platform, and contributing to the effective management of spending activities across borders. 

On October 20, Ecobank Group and Mastercard entered an agreement to roll-out MasterpassQR, a mobile payment solution, across 33 African markets with the intention of impacting 100 million new customers by 2020.

Q: At a time when customers have so many choices in payment systems, why should they choose Mastercard?

Mastercard is at the forefront of driving a ‘world beyond cash’, and what this means for all people is a more inclusive, innovative and safe payment ecosystem that will benefit everyone.

The benefits of working with Mastercard include: proven track record for providing safe world class payment systems as a result of our partnerships across the continent; we operate the world’s fastest payment processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. We use technology and expertise to make payments safe, simple and smart for everyone; we know safety and security are the top priorities for customers, cardholders and partners, so we are continuously committed to developing new and better ways to keep payments safe.

But, it is our commitment to meaningful innovation that really sets us apart. We use advances in technology to directly deal with challenges being faced by governments, policy makers, financial institutions, business and merchants as well as consumers. 

Q: How is Mastercard tackling other fintech companies?

Diversity in the financial sector is important to advancing the evolution of economies, and we view partnerships with fintechs as being an important part in meeting the various needs of people in Africa.

An example of our continued commitment to supporting start-ups in this technology sector, is our start-up engagement program Start Path Global, which works with startups to give them a platform to learn and grow – as well as to connect to our global network. We frequently call for submissions throughout the year from start-ups to apply for our program as there is a vibrant and talented community of start-ups in Africa. Additionally, our Lab for Financial Inclusion works with fintechs to develop sound market insight before developing solutions. This methodology is one shared by our entire business.

– Interviewed by Methil Renuka

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