Mobile money may well be the most talked about “reverse innovation” that was first developed in emerging markets to provide financial inclusion to populations who had before then been unbanked or underbanked. In 2015, more than a billion mobile money payments were registered across the world, more than double the number of payments Paypal processed over that same year, a clear sign that mobile money has taken over emerging markets, particularly Africa. After having taken by storm person-to-person transfers and airtime top-ups, mobile money operators are looking at merchant payments, providing a crucial alternative to current mainstream payment options such as cash on delivery. Pan-African e-commerce Jumia has already jumped on the train-wagon and is launching its own mobile money solution, JumiaPay, in Nigeria, its biggest operating country.
Mobile Money can seem quite foreign to people who do not live in emerging markets: it is a tool that allows its users to transfer money or make payments without having to have a bank account. Sub-Saharan Africa already accounts for 223 of the 411 million registered mobile money accounts in 2015 with 84.1 million active users. The rise of smartphone adoption and the growing reach of mobile broadband (at 53% for Sub-Saharan Africa in 2015) have further boosted this rapid adoption of mobile money.
Pan-African e-commerce Jumia is now taking advantage of its investors MTN, Orange and Milicom telecom strongholds in Africa and their millions of mobile subscribers to surf on the wave of mobile money, providing key mobile money solutions to its customers. Already 50% of all Jumia customers access the platform via a mobile phone, that figure reaching 70% for Jumia’s biggest market, Nigeria. However, cash on delivery remains the preferred option of payment on Jumia, totalling between 70% and 95% of all payments depending on the country. E-commerce Jumia is now hoping to surf on the strong mobile use of its customers and its telecom partners expertise to provide a very popular prepayment option in Africa.
The biggest announcement will come this week when Jumia will announce the launch of its in-house mobile money payment solution, Jumia Pay, in Nigeria. The online payment solution JumiaPay will most certainly be decisive in facilitating online payments and encouraging the progressive change to cashless societies, something that is very dear to Jeremy Hodara, co-CEO of Jumia:“JumiaPay has a very simple yet crucial objective: go even further in providing a safe, a secure and a convenient shopping experience to our customers, building trust along the way between us, our thousands of sellers and our millions of customers. We are very proud to be able to offer this new service to our customers and participate in building financial inclusion in Africa to unbanked or underbanked populations”.
The advantages of mobile money are central for e-commerce in countries where those services are no more than four years old and where the main challenges are to build trust for the customers and provide adequate payment systems. With its very secure payment system using a confidential code, mobile money payment is among the most trusted forms of payment across Africa. Mobile money also offers many perks for the customer. First, the transfer is instantaneous and cheaper than any bank transactions. Second, payments via mobile money do not require the user to have a bank account, something decisive in 19 African countries where the population has less bank accounts than it has mobile money accounts.
Industry collaborations will also be essential to unlock the full potential of online merchant payments across Africa. No one has understood this better than Jumia. If merchant payments only represented 1.9% of the total mobile money transaction volume in 2015, they already stand for 4.1% of its value and grew by 28.2% in 2015. Jumia benefits from strong ties with MTN, Orange and Millicom and has used them to launch mobile money solutions MTN Mobile Money, Orange Money and Tigo Cash. Orange Money solutions are expected to launch in Ivory Coast and Cameroon on Jumia’s two biggest platforms there, Jumia Mall and Jumia Market (formerly Kaymu) at the beginning of Autumn. MTN Mobile money and Tigo Cash are already live on more than 20 Jumia platforms (Jumia Mall, Jumia Market, Jumia Food, Jumia Travel and Jumia Deals) across 7 crucial countries in Africa, including 2 (Ivory Coast and Uganda) where the portion of the population with a mobile money account is higher than the portion of the population with a bank account. MTN, Orange and Tigo strongly believes in the potential of mobile money for e-commerce and looks at merchant payments as the next frontier for mobile money.
All are looking at the Kenyan success story of M-Pesa which already accounts for 1 out of every 4 transactions made on Jumia platforms in Kenya and hope to reach similar or higher levels very soon.
Bertille Guitton For further information please contact us on b firstname.lastname@example.org
Sources: Jumia Internal Data 2015-2016 2015
State of the industry Report Mobile Money, GSMA