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Is Mark Zuckerberg coming for Africa's lucrative Fintech market?

Facebook, finally launches WhatsApp payment in Brazil, its second-largest market after testing in India.

In 2014, Facebook acquired WhatsApp, two years after, 2016, Mark Zuckerberg visited Nigeria and Kenya as part of his approach to learning more about the Africa region and optimize Facebook to serve the region better. Four years after in 2020, WhatsApp joined the likes of WeChat in China to launch its payment service allowing customers to send money to peers through WhatsApp.

WhatsApp says in its blog post that the payments service — which currently is free for consumers to use (that is, no commission fee taken) but businesses pay a 3.99% processing fee to receive payments — will work by way of a six-digit PIN or fingerprint to complete transactions.

You use it by linking up your WhatsApp account to your Visa or Mastercard credit or debit card, with initial local partners including Banco do Brazil, Nubank and Sicredi. Cielo, a payment processor, is also working with WhatsApp to complete transactions. “We have built an open model to welcome more partners in the future,” it noted.

Today we're starting to launch payments for people using WhatsApp in Brazil. We're making sending and receiving money as...

Posted by Mark Zuckerberg on Monday, June 15, 2020

WhatsApp, which has 2bn users globally, is especially influential in Africa. It is the most popular social platform in African countries such as Nigeria, Ghana, Kenya, and South Africa.

Considering that Uber launched Uber Cash in four African countries at the same time, one can imagine how easy it can be for Facebook who has more social and financial capital to launch its WhatsApp payment across Africa - where it leads the messenger and much widely the social media market.

Facebook's footprint in Africa's development can be seen across Africa through the following programs:

Facebook Express Wifi (Available in 7 African countries including Nigeria)
Facebook Digital learning programs implemented by several African organizations
Facebook Hub (called NG Hub in Nigeria)
The Fb Start Accelerator program

These programs and more across Africa give Facebook a good standing with government regulators to obtain the requisite license to operate its new payment service in Africa, unlike in India where it faced a maze of regulatory hurdles, forcing it to launch in Brazil.

As an economist, I am familiar with a quote:

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest." Adam Smith

It is not possible for Facebook investors to continue subsidizing the usage of WhatsApp in Africa which is currently FREE without adopting a monetization strategy such as the new payment service.

Facebook already has all it takes to be the WeChat(super app) of Africa. Facebook's WhatsApp has the honey (unique product) to attract the ants (mass market). WhatsApp has the ubiquitous messenger service in Africa, WhatsApp business, and now a payment service; all of which positions WhatsApp to join the super app contest.

Fintech's in Africa must remain innovative to stay relevant when Mark shows up.