Mobile merchant payments driving financial inclusion
Juniper Research forecasts that mobile merchant transactions by unbanked individuals will grow from 1.8 billion per annum in 2018 to 3.8 billion by 2023.
Kenya and India will be core incubator markets. Safaricom’s Lipa Na M-Pesa product has over 100,000 merchants enrolled, and by 2023, payment transactions in the Middle East and Africa alone will surpass $16 billion per annum.
Mastercard is singled out as a key innovator in the sector. The company has launched a QR code-based solution with the aim of connecting 40 million micro and small merchants to its payments network by the end of 2020.
Juniper Research’s Lauren Foye says: “Previously merchant payments relied upon SMS to facilitate transactions, with customers texting a code to initiate payment; thus the process was slow and inefficient. With QR code solutions, shoppers simply scan a merchant code to rapidly initiate the payment process.”
Mobile merchant payments are making digital transactions accessible to a much broader segment of society (as a Point of Sale terminal is not required). Juniper Research recommends that players provide value added services, such as microloans, analytical tools and advice for businesses, in addition to SMS-based marketing services, as a means to drive engagement. It cautions that tariff rates must remain low, citing the fact that Lipa Na M-Pesa was obliged to impose a 50% reduction in fees last year, both to address customer indifference and ward off competition.
