Recent trends suggest Mobile Money has been less prevalent in South Africa than in other major fintech markets like Nigeria, Kenya, Egypt, and Ghana.
Industry expert Ali Hussein Kassim, has disclosed several reasons why mobile money has not gained as much traction in South Africa compared to other major African fintech markets:
Higher banking penetration:
South Africa has a more developed traditional banking sector, with around 85% of the adult population having a bank account. This reduces the need for alternative financial services like mobile money.
Regulatory environment:
South Africa has a more rigid regulatory framework for mobile money services than countries like Kenya. Mobile money providers are treated as banks and subject to complete regulatory compliance requirements, making it more challenging to enter the market.
Existing financial infrastructure:
South Africa already has a relatively advanced financial infrastructure, including widespread ATM and point-of-sale networks. This reduces the urgency for mobile money solutions.
Competition from existing services:
South African banks and retailers already offer money transfer and payment products, creating a more competitive landscape for mobile money providers.
Distribution challenges:
The high crime rate and cost of cash handling in South Africa make it impractical to roll out the extensive agent networks crucial to mobile money success in other African countries.
Consumer trust and preferences:
South Africans may have higher levels of trust in traditional banking services and be more accustomed to using bank accounts and cards for transactions.
Different market dynamics:
Unlike countries where mobile money thrived due to large unbanked populations and limited financial infrastructure, South Africa's more developed financial sector presents different challenges and opportunities.
Focus on other fintech innovations: South Africa's fintech sector has grown in digital banking and payment apps (e.g., SnapScan and Zapper) that work with existing bank accounts rather than standalone mobile money solutions.
Hence, while mobile money has yet to take off to the same extent as in other African countries, South Africa still has the potential for growth in digital financial services, particularly in serving underbanked populations and improving financial inclusion.
