Afrigather Regardless of the expansion of many payment channels equivalent to apps and QR codes, Africans proceed to make use of USSD extra for making funds throughout banking and cellular cash merchandise. USSD-based transactions had been used for cellular cash and cross-domain transactions attributable to their easy and user-friendly interface that doesn’t require a smartphone or web connectivity. These USSD channels, which contributed 70% of immediate cost channels as of June 2023, have been key in facilitating transactions that transcend conventional cellular cash companies, together with transactions between completely different monetary establishments.
In Ghana and Kenya, cellular cash programs, significantly these utilizing offline channels like USSD, are fashionable and supported by clients over card-based programs. This sturdy choice aligns with the share of individuals with cellular cash accounts at 60% in Ghana and 69% in Kenya. Nevertheless, whereas USSD is fashionable, it has been cited as a barrier to ease of use in funds. “Advanced USSD menus and failed transactions are significantly detrimental to make use of,” stated AfricaNenda, a digital cost technique organisation in its inclusive immediate cost programs (IIPS) report.
Cross-domain immediate cost programs facilitate interoperability between banks and non-banks, enabling transactions throughout each financial institution and cellular cash accounts. Whereas app channels observe USSD when it comes to reputation, they introduce friction factors like entry to smartphones and web connectivity, the adoption of which stands at 51% and 43.2% respectively.
There’s a rising acceptance of fast response (QR) codes as one other channel. Cross-domain and financial institution IPS supply the broadest array of channels, whereas cellular cash immediate funds usually favour agent, USSD, and app channels. Based on AfricanNenda, which launched an immediate funds programs (IPS) report in November 2023, this range exhibits the evolving monetary companies ecosystem in Africa.
Per AfricaNenda, digital cash (e-money) devices are additionally fashionable, with widespread assist from cellular cash and cross-domain immediate cost programs. Cross-domain programs additionally use industrial cash devices like credit score and debit digital funds switch (EFT), whereas financial institution IPS deal with credit score EFT, with debit EFT as a secondary instrument. This range underscores the various cost strategies in use throughout completely different cost programs.
“For an IPS to be a cross-domain system, it should have a switching capability between industrial cash devices (equivalent to debit digital funds switch (EFT), credit score EFT, and home card devices) and e-money devices. Operators use one in all two approaches to attain a cross-domain IPS,” stated AfricaNenda within the report.
IIPS is necessary as a result of the demand for immediate digital funds is rising. In 2021, 50% of Sub-Saharan African adults used digital funds, up from 34% in 2017.
