Credit Card Companies in Hot Pursuit of Customers in Africa
Dec 13, 2011 (Menafn - The Nation/All Africa Global Media via COMTEX) --Africa's unbanked population stands to benefit from the entry into the continent of Visa and MasterCard, both providers of credit card services.
Visa pitched tent in Rwanda last week to provide financial services to millions of the unbanked population.
Rwanda, with an estimated population of 11 million, has less than 100,000 credit card holders and no more than three banks issuing the service.
Almost at the same time, MasterCard partnered with Ecobank to bring credit cards to millions of people in 30 African countries.
Financial inclusion is a business plan that credit card firms must execute in order to survive in a changing international economic climate.
Mr Michael Meibach, MasterCard's president for the Middle East and Africa said: "Increasing the acceptance of MasterCard throughout Africa is a key objective for us."
Earlier, MasterCard had signed a deal with Airtel to provide payment solutions facilitated by Standard Chartered Bank in Nigeria while just two weeks ago, Visa signed a partnership with Orange Money and Equity Bank in Kenya. Safaricom's M-Pesa has linked up with I&M Bank and Visa.
Credit card companies are realising the unexploited potential of Africa's unbanked and are tapping into what seems to be an unlimited resource of people hungry for financial services.
"Our goal is the 86 per cent of Rwandan citizens who do not have access to banking services," said Ms Elizabeth Buse, the group president, Asia Pacific, Central Europe, Middle East, and Africa.
These firms may have reached a plateau of revenue collection in the West and are realising that the emerging markets are the next frontier of generating revenue.
Currently, Visa collects 57 per cent of its revenue from North America. However, by 2015, the firm plans to generate more than 50 per cent of its income from the rest of the world.
"We are looking at economies in Asia such as Japan, but are also turning to emerging markets," Visa's senior executive for Singapore, Mr Rene Ho, told the Smart Company.
In addition to partnering with regional banking giants such as Ecobank, the firms are also reaching out to Africans through what is fast becoming a familiar technology -- mobile money transfer.
Mobile technology has become the single most important driver of financial inclusion. It is estimated that in the past decade, more than 100 million people have accessed financial services through mobile phones.
According to Electronics Payment International, the number of unbanked people with mobile phones is expected to grow to 1.7 billion by 2012.
Data from Kenya's Central Bank indicates that the value of transactions made through mobile money stood at Sh919.22 billion as of June 2011, a 53.89 per cent increase from last year.
The value transacted through credit cards in the same period stood at about Sh1 trillion. While this number is higher, the rate of growth in mobile money is far higher, at 44.9 per cent, than that of cards at 22.06 per cent.
In Visa's view, widespread use of mobile money may surpass credit card use in Africa. If credit card firms do not catch a piece of the pie now, they may lose the market completely.
Copyright The Nation. Distributed by AllAfrica Global Media (allAfrica.com).