Mobile money – a compensatory solution to bridge the banking gaps
In 2019, the Global System Mobile Association (GSMA) had valued the daily volume of mobile transactions in Africa at $1.9 Billion and sized the number of registered mobile money accounts at one billion spread across the continent. In 2020, GSMA also estimated that the total transactional volume has reached $495 Billion. Considered as a consumer proposition that helps to curb the impact of the COVID-19 pandemic, mobile money usage keeps skyrocketing, and Africa is currently the leading market driving this growth. With 80% of its population unbanked, Africa remains highly dependent on cash with most transaction face values not exceeding $15, making life very difficult for individuals whenever they need to pay their bills. This is where mobile money wins market share of payments. Furthermore, with the mobile phone market being expected to reach 4.6% CAGR (2019-2025) compared to 3% worldwide, the African continent presents itself as the perfect backdrop for mobile payments.
Mobile money is not Mobile banking
Technically, it is worthwhile to note that Mobile money is a digital payment platform allowing funds to be transferred from one cell phone to another, it is different from Mobile banking, where account holders use internet-enabled mobile devices to manage their bank accounts.
Mobile money is relevant to the airline industry
The airline industry is a singular market in sub-Saharan Africa where payment challenges differ from other regions. One clear issue that airlines are currently facing is the historically low online sales generated within the region. Africans typically buy their airline tickets through bricks-and-mortar travel agencies or at the airline’s front desk – very rarely via an online travel agent (OTA) or airline website. African airlines and mobile operators have been working hand in hand to offer the African traveller the possibility to purchase airline tickets from the comfort of their home and not at an airline counter or a local travel agency. Today, Kenya airlines allow its clients to pay for a flight booking via mobile payment technology across five different countries using six different mobile network operators. Ethiopian Airlines – the regional market leader – covers more than 10 African countries and works with 12 mobile operators that provide mobile payment solutions. Other companies, like South African Airways, Air Côte d’Ivoire, Camair-Co and Africa World Airlines also offer that same service. Yet, there is room for further improvement. The mobile money payment journey is not a truly frictionless experience for users with a typical transaction going as follows:
Why airlines should consider adopting mobile money
European airlines have had a long history of serving the African continent. Air France, British Airways, Brussel Airlines and Turkish Airlines are the European leaders flying daily in and out of the sub-Saharan African capitals. To sell locally, they highly rely on sales offices in the destinations they serve. Still, none of the airlines is offering mobile money as a payment method on a large scale – Air France and Airtel money in Gabon being the only known case at this stage. African airlines know their customer base, understand the economic realities of the continent and are aware of the mobile money penetration, potential and growth. EDC believes that other airlines should consider following the lead to remain competitive, increase conversion rates, and better serve customers. If you are interested to know how mobile money payment solutions can help your business to better serve your customers and improve customer experience, do not hesitate to contact Louis Wapler at Edgar, Dunn & Company (EDC).
The content of this article does not reflect the official opinion of Edgar, Dunn & Company. The information and views expressed in this publication belong solely to the author(s).