How Digital Wallets Are Taking Over Payment Transactions In Africa

A “digital wallet” or “mobile wallet” is a way of storing, sending, and receiving money via a mobile phone or computer. It’s essentially a software, or electronic device, or an online app/platform that enables you to make transactions electronically. While the popularity and adoption of this fintech solution is fairly recent, however, the technology behind digital wallets has been around for decades.

The first digital payment system was built into Coca-Cola’s vending machines in 1997 and allowed people to pay for soda purchases via text message. However, the first foray into digital payments as a fintech solution was done by e by Confinity and X.com in 1999. They later merged to form PayPal in 2000. Later on, a number of other digital wallets started to crop up around the world, such as Amazon Pay in 2007, Stripe in 2010, Google wallet (now Google Pay) in 2011, and Apple Pay in 2014.

While digital wallets provided convenience, security and safety to its users, however, its adoption remained surprisingly low. The Covid-19 pandemic provided the trigger needed to change this. Today, the mobile wallet sector, currently worth $1T,  has become one of the fastest-growing industries in the world, changing the way people manage and spend their money.

Africa: Why it’s the world’s fastest-growing region in terms of mobile payment adoption

Africa had the world’s highest percentage of unbanked citizens. Around 80% of the population on the African continent did not have access to brick and mortar banks. The continent leapfrogged traditional banking infrastructure and moved straight to mobile payments as early as 2007.

The story of mobile/digital wallet mass adoption began in Kenya, when workers in the city were fraught with  great hardships while trying to send money to their relatives in the village. They used to take their cash, go to the nearest bus station and find a bus that was going to their village. They would give the money to the driver tasked to find their relatives and deliver the money. The money transfer would often take days, not to mention the security risks involved.

The penetration of mobile phones skyrocketed during this period and Telcos such as Safaricom and MTN were quick to capitalize on the existing lack of infrastructure to create a thriving mobile money ecosystem. Workers started experimenting with mobile applications to transfer money directly to the phones of their relatives and thus mobile wallets became the gateway to banking and financial services. 

Sub-Saharan Africa, was the fastest in adoption of mobile technology and has now become a global leader in mobile money. As of December 2020, approximately two-thirds of total global mobile money transactions were driven by users in sub-Saharan Africa (SSA). According to Statista’s Global Consumer Survey in 2021, Kenya, a pioneer in the development of mobile money in Africa, enjoyed a record high in mobile transactions at $55.1 billion in 2021, up nearly 20% from 2020.

Apart from telecom companies, several banks and fintech companies such as Saamaya Finance are now offering digital/mobile wallets. The number of registered mobile wallets in the continent has exploded from 1 million in 2010 to more than 621 million in 2022, a 17% increase from 562 million captured in 2020. Digital wallets are replacing physical cash, and African citizens are embracing digital wallets for banking, finance, shopping, health, education, and entertainment, replacing cash as the most favored banking and money transaction method.

The impact of digital wallets in Africa

In Africa, most people pay or get paid in cash. Mobile wallets changed all that by providing a faster, cheaper and safer alternative. Digital wallet technology opened up avenues for businesses and NGOs to securely operate in underdeveloped regions. 

Today, the digital tools and services offered, allow Africans to store, transfer and manage money more efficiently. Digital wallets have broadened and democratized financial inclusion by enabling low-income communities (previously neglected/excluded by the banking institutions), to have a safe way to save and transact money, create a financial identity and credit history, insure their property and gain access to other financial services such as microinsurance and loans for small business ventures.

Digital wallets have had a far reaching impact not only on our nation as a whole, but also on individual consumers and households. 

Higher savings for households and financial resilience 

Recent research confirms that households are able to better respond to unforeseen difficulties when they have access to mobile money/digital wallets. For instance, when an unexpected negative event—such as a flood or a child falling ill—occurs, households with digital wallets are able to rely on the easy and affordable transfer of money from family and friends even if they are living far away, without having to reduce their spending on food and related goods in response to the event. Digital wallets thus help by enabling risk-sharing among the community or family irrespective of location, hence providing the much needed financial resilience.

A more formal economy with greater Transparency 

Digital wallets electronically record all transactions, which improves the security of payments as well as their transparency, the consequences of which are far-reaching on the economy. Greater transparency of earnings, transactions, and remittances greatly improve tax collection. A mature digital wallet industry fosters formalization of the economy, integrating the informal sector users with formal banking and insurance, and allowing for stronger links to the government through tax collection, social protection schemes, and other government programs.

Long-term effects on occupation decisions

Access to digital wallets and mobile money has changed the way that individuals within households make occupation choices, especially among women. A recent study estimated that approximately 185,000 women in Kenya, moved from agriculture to small-scale retail as a result of access to mobile money. Similarly, there was a shift from farm-based work to self-employment in Uganda and migration from rural to urban areas where the income is higher in Mozambique, all because mobile money increased individuals’ trust that they could easily and safely remit money to their families in the rural areas.

Crop insurance and inclusion of smallholder farmers which account for 70% of population

Smallholder farmers, till recently, had no access to agriculture insurance as in western countries. In the absence of adequate risk mitigation mechanisms, farmers were caught up in a vicious cycle of poverty and were left to the mercy of disasters.

Digital wallets changed that. Fintech companies like Pula, which now operates in 17 countries across Africa, use digital wallet technologies and bundle crop insurance with inputs bought by small farmers and credit services from aggregators, or government subsidy programs, thus enabling insurance affordability.

Affordable Solar powered Electricity

Digital wallets such as M-KOPA Solar have connected hundreds of thousands of off-grid homes to affordable solar powered electricity for lighting, cooking and charging their mobile phones. Customers make small daily payments, paying off the cost of the kit over the course of a year. The household then completely owns the solar power system and can continue to use it without making any further payments. This has helped to bring the benefits of solar lighting to several thousands of rural homes, relieving mothers from the burden of fetching firewood and burning kerosene late into the night.

Cameroon: How digital wallets are now the second most preferred mode of payment after cash

Using a mobile phone to make and receive payments, send money back home to family, or just have a bank account, is now commonplace. The technology has transformed how banking and transactions are done not only in Africa, but all over the world.

Cameroon too has benefited immensely from this wave of mobile money adoption. Cameroon has traditionally been a heavily regulated financial landscape. It had, for a very long time, been limiting access to services such as mobile money, micro loans, and much more. But over the past few years, mobile money and e-wallet technology has been on a fast rise in the country, turning the dormant financial services in Cameroon a little worthwhile.

In Cameroon, 1.7 million persons had a bank account in 2017, accounting for only around 31% of the country’s total registered mobile money accounts (5.4 million) at the time. In comparison to traditional bank accounts, fintech solutions have seen enormous adoption in Cameroon. Though cash transactions are still predominant, however, Cameroonians have started to prefer mobile money transfers to cash transactions when it comes to sending money to relatives.

The government of Cameroon is clearly dedicated to promoting digitization and access to financial services across the country, with initiatives like a start-up incubator and a national payment switch aimed to reduce mobile transaction costs and enable better interconnection conditions. However, much work remains to be done not only to secure the country’s digital networks, but also to establish civilian trust in digital technology. 

At Saamaya Finance, we aim to be instrumental in revolutionizing and digitizing the Cameroonian Fintech sector, in boosting Cameroon’s growth and positively impacting the lifestyles of millions Cameroonians all over the world.

How digital wallets like Saamaya Wallet can become a household staple for Cameroonian consumers

Contrary to popular belief, digital wallets do not save card numbers or bank details on their app. Instead, a unique virtual number is assigned. This safeguards your funds even if your phone is misplaced or stolen. Digital wallets are in fact, the fastest, safest and most transparent modes of payment available.

Apart from convenience, user-friendliness, security, and safety (contactless transactions), digital wallets offer several services:

– Microfinance, Investment and Savings: Save and grow your money 

– Fund transfers: Send and receive money 

– Airtime top-up: Refill your account balance 

– Bill payment: Pay your bills  

– Merchant payment: Pay for goods and services.  

– Cash collection: Pay for school fees and more. 

Saamaya Wallet: An innovative digital wallet with ground-breaking features

Saamaya Finance is a Cameroonian start-up. Our purpose is to digitalize money transactions across Africa and improve the lifestyle of millions of Africans across the globe. We aim to revolutionize the future by delivering easily accessible Fintech solutions without compromising the uniqueness of our continent.

With Saamaya wallet, you can send and receive money, shop at your favourite stores, pay bills, refill your mobile account, all from the comfort of your home. In addition, you may benefit from getting access to some really cool, unique, groundbreaking features such as:

Social network: A social media feature called Kongo$$a that allows customers to brag about their financial transactions and keep tabs on friends and family spending habits. 

Merchant promotions: Customers enjoy exceptional deals from merchants that are part of the Saamaya Finance network.  

Rewards programs:  Customers get rewarded for joining Saamaya Wallet, referring friends and family, and ultimately remaining loyal users.  

Financial statement: Customers get to receive mini and full statements  

Spending tracker: With MySpending, customers can get an overview of money coming in and coming out.  

QR code/scan: Customers can QR scan to pay for merchants’ goods and services. 

Passkey: Customers get extra account security by enabling fingerprints  

Avatars: Customers can pick cool avatars as profile pictures.

With multiple high-tech integrations, Saamaya Wallet seamlessly takes care of your finances like no other app out there. It provides fast, secure, affordable, convenient cashless financial transactions right at your fingertips.

Join Saamaya Finance now and help us shape the future the way we deserve it.