PERSPECTIVES Cardless and cashless societies; how Africa is running the race

The world is slowly becoming a massive blend of cashless societies, but Africa seems to be leading the world at a pace faster than usual for the continent.

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In the near future, your financial services provider might roll out a cashless system based on the digital wallet concept, or one with an additional level of security using biometrics that would extend beyond your smartphone.

That would have been a opening line for a speech from 5 years ago, and it couldn’t have been any righter. That future is near; though not as near as cashless society enthusiasts would expect it, the world is slowly gearing towards a global economy that deals less with paper (cash/document) and more digitalized data.

Electronic payments have made substantial inroads among consumers in some developed countries. Many of these markets have been building the infrastructure for cashless transactions for a long time. Affordable and broadly available financial products, a vibrant and competitive merchant marketplace, a transparent and productive business environment — all of these are strongly correlated with progress towards a world without cash.

But even in the most cashless developed countries on Earth, like France and the Netherlands, cash still accounts for 40% or more of all consumer transactions.

But Africa is not part of this slow grind, Africa leads the pack.

The rise of mobile money in Africa

Africa is already leading the world in the use of mobile money, and its growth is accelerating. In countries such as Kenya, Tanzania and Uganda, mobile-money accounts have become much more widespread than bank accounts. More than 17 million Kenyans (two-thirds of the adult population) are using mobile-money services, mainly to transfer money to family members or business partners in distant locations, but increasingly for bill payments and small loans.

In 2014, a report carried by was titled “Zimbabwe: Africa's first cashless society?”. The report intended to highlight how Econet’s Strive Masiyiwa believed that his company was positioned to help solve Zimbabwe’s then growing money problems by introducing their wireless cash system.

The success of Econet Wireless in Zimbabwe had a cynical twist to it; it was majorly nurtured by the subsidence of Zimbabwe’s economy in 2000. Strive, the founder of the company, argues otherwise; stating it was the hyperinflation witnessed in the country at the time which destroyed the confidence of Zimbabweans in financial institutions thus leading them to his Econet. Since the lowest denomination that was in circulation was $1, and getting change for the purchase of small goods became extremely difficult, Econet Wireless capitalized on this gap to set up a mobile payment which takes care of small amounts thereby allowing people to make savings as little as $1.

MTN has it’s MTN Mobile Money service across Africa, Tigo runs a TigoCash service and Vodafone recently launched it’s Vodafone Cash in Ghana play

MTN has it’s MTN Mobile Money service across Africa, Tigo runs a TigoCash service and Vodafone recently launched it’s Vodafone Cash in Ghana


But this is not the only indigenous solution in Africa, Kenya has it’s widely successful M-Pesa service. The M-Pesa is a mobile-phone based money transfer and microfinancing service, launched in 2007 by Vodafone for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania.

The success story of M-Pesa is known globally with some media outlets calling Kenya a true leader and forerunner globally in mobile money.  The service has since expanded to Afghanistan, South Africa, India and in 2014 to Eastern Europe. M-Pesa allows users to deposit, withdraw, transfer money and pay for goods and services easily with a mobile device.

Variants of the M-Pesa service have sprung up across Africa, usually proffered by mobile telecommunication companies (MTN has it’s MTN Mobile Money service across Africa, Tigo runs a TigoCash service and Vodafone recently launched it’s Vodafone Cash in Ghana).

Why Africa is going cashless faster

Most of the mobile cash services in Africa are attribute their growth on the distrust of financial institutions, and in some cases the total non-existence of traditional banks.

In Somalia, the influx of mobile phone services has been specifically attributed to the fact that traditional banks are almost non-existent. Thus, a mobile revolution has created an informal banking system with more efficiency and convenience than anything around the world.

In the cities of Somaliland, this cashless future has arrived: cash is fast disappearing and credit cards are unnecessary as daily shopping is speedy and digitalized now.

Also, Africa has become the test ground for mobile money innovations because they allow customers to receive money from family and friends abroad, obtain micro loans and buy insurance. These cash-light economies are allowing the unbanked majority to enjoy the benefits of the financial markets, such as access to credit, for example.

Is going cashless helping?

A school of thought believes it makes sense to get rid of cash and even credit cards, as a cashless financial system is marketed to the public as the ultimate time-saver. Companies and even some governmental institutions are selling the idea that reaching to get cash or a credit card from your wallet is primitive, as well as insecure, which would be rectified by utilizing a secure digital system that implements biometrics. An example of these countries is Ghana where in the recent budget reading, Ghana’s Minister of Finance, Seth Terkper, mentioned how the government would be offering e-cash cards to officials.

But what are the intrinsic benefits of going cashless.

Security: The technology being used to usher in a cashless age has the potential to offer security benefits to its users:

  • It’s very easy to shut down a digital wallet remotely if it falls into the wrong hands.

  • Your biometric ID is yours and yours alone, and therefore almost impossible to copy.

Convenience: A cashless system could be convenient for users who like to combine multiple functions onto one handheld device:

  • It eliminates the need to carry cash or plastic.

  • Digital payments can be made with a tap or wave of a smartphone, depending on the technology used.

  • It would make it easier to loan or borrow money – as with digital payments, lending and borrowing time can be reduced thanks to immediate transfers

Technology forecasters are not always accurate in their predictions.

If you don’t like digital wallets or biometric IDs, then don’t use them. And take steps to be with a financial service provider that won’t pressure you to sign up for a digital wallet or a biometric ID.

What do you think about the possibility of a cashless future? Does the convenience outweigh the risks?

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