The digital payments revolution is spreading rapidly across the globe, with Africa at the forefront of this information. Historically, the continent has been seen to lag behind in various aspects of economic development.

However, its focus on digital payments demonstrates a serious commitment to changing that narrative.

A notable shift has been observed, with the fintech players leading the drive to move Africa from traditional and cumbersome forms of payment to the seamless, convenient, and secure methods of digital payments. Although there is still much progress to be made, as the majority of transactions across Africa are still conducted using cash, there is a promising future ahead.

According to a study by Mckinsey, a global consulting firm, revenues generated from electronic payments in Africa are projected to increase by 20 percent annually. By 2025, the continent is expected to generate $40 billion from digital payments. This growth potential positions digital payments as a beacon of hope for Africa’s economic advancement.

Related News

While Fintech companies lead in the drive to help everyday Africans transition from cash to electronic payments, markets with relatively low digital payment capabilities present opportunities for digital payment growth. Their growth and migration to the digital payment systems is critical to the continent’s economic progress, what with $40 billion on the mark.

Here in Sierra Leone, for instance, the digital payments sector is largely driven by web payments, mobile payments at point of sale (POS) machines via smartphone applications and digital remittances (cross- border money transfers). This shows the limited digital payment services being offered.

In 2020, when this country experienced cash shortage, banking customers were unable to withdraw enough cash to meet their everyday needs. But with the crisis, came the opportunity for the growth of digital payments. That same year, the digital payment transaction value was a little above $500,000. The total digital transaction value is projected to reach US$1,867.00m in 2023, a growth rate of 21.79%, with mobile POS payments contributing over 80% of that value.

With an impressive growth rate as this, it is no wonder that the Sierra Leonean market has become a destination of sorts for digital payment service providers. The Government of Sierra Leone, through its Bank of Sierra Leone and the Ministry of Finance, is providing an enabling environment through its digital payment capacity building efforts, infrastructure development and encouraging the adoption of digital payment options by industry stakeholders and last mile consumers.

To enhance its capacity building efforts, the government recently commissioned the provision of digital payment solutions for the National Commission for Social Action (NaCSA) and capacity building for the ecosystem actors in Sierra Leone.

In strengthening its digital payments infrastructure, the Bank of Sierra Leone developed it’s National Payments System a national payment switching infrastructure that connects all 12 commercial banks in Sierra Leone. Through this initiative, Interswitch successfully worked with participating banks to build their connecting infrastructure and ensured that the banks and their applications met the deadline for integration with the national switch.

With the NPS, banks in Sierra Leone are inter-connected, enjoy swift connectivity, enabled to carry out on-us and Not-on-us transactions, as well as provide improved services to their customers. Customers’ trust is increased as they are guaranteed more convenient and secured payment transactions. It will also boost the efforts of the Sierra Leonean government in improving financial inclusion, data security and a reduction in transaction costs.

To encourage stakeholders to adopt digital payment option, the NPS has successfully integrated the Sierra Leone Commercial Bank, United Bank for Africa, Sierra Leone and Guaranty Trust Bank, Sierra Leone.

Upon integration, the banks can efficiently carry out own and third-party transactions, enjoy swift connectivity and provide improved services to their customers.

While Sierra Leone continues on its journey towards a more digitized payment system, to ensure that digital payments become widespread on the continent, focus needs to shift to enhancing digital infrastructure. This can be in the form of reliable internet connectivity, especially in rural areas, and investing in robust telecommunications networks, to develop interoperable payment systems.

The provisions of the foregoing will enable individuals and businesses to effectively participate in the digital economy, reducing the gap in financial exclusion. Focus should also be on further strengthening regulatory frameworks, which is vital for the expansion of digital payments on the continent.

Governments should establish regulations that foster innovation, ensure consumer protection, and promote collaborative competition in the industry.

If digital payments are to take a foothold on the continent, more enabling infrastructure will need to be provided, and that is Interswitch Group’s forte. The company is Africa’s leading integrated payments and digital commerce company, providing payment rails that connect the continent, ensuring seamless and secure digital payment while building a prosperous Africa.

This journey began in 2002, when interswitch opened shop in Nigeria, Africa’s largest economy, to solve the cumbersome issues of payments in the country at the time. It has since expanded beyond Nigeria and provided payment rails that have become the standard across the continent.

True to its word, Interswitch has exported its infrastructure, competencies, and experience across markets in Africa, such as Gambia, Kenya, Uganda, Ghana, Tanzania, and recently, Sierra Leone.

There has been a marked growth in the adoption of digital payment solutions, with digital products such as mobile money, online banking, and digital wallets gaining popularity among the population. This is evidenced by Interswitch’s landmark transaction volume, processing over 1.2 billion transactions in Nigeria in March 2023, a record-breaking feat.

Africa’s commitment to digital payments represents a significant step toward its economic development. By embracing digital payments, the continent can overcome traditional challenges and pave the way for increased financial inclusion, efficiency, and growth. With continued efforts and strategic investments, stands to become a global force in the realm of digital payments.