Mastercard invests $ 100 million in Airtel mobile money – Quartz Africa

Global payments giant Mastercard’s $ 100 million investment in Airtel Africa’s mobile money business, announced this week, is a sign of the rapid growth and optimism of the digital payments industry in Africa .

The transaction values ​​the Airtel Mobile Commerce subsidiary at $ 2.65 billion. It follows a $ 200 million investment in the company by TPG’s Rise Fund just two weeks ago. TPG and Mastercard now hold minority stakes in the company.

More than half of the world’s mobile money services are located in Africa, according to a recent report from the GSMA, which makes it a fertile market for investors. Mobile money services are defined as being accessible to people who do not have formal bank accounts.

Airtel Africa is a London-based company operating in 14 African countries. According to George Bodo, CEO of Callstreet Research and Analytics, a Kenya-based investment and market research platform, the deal will enable Africa’s leading telecommunications companies to build their mobile money platforms to accelerate their growth. Last month, the South African channel MTN noted he was considering splitting his financial services unit and potentially listing it to unlock value in his core business.

Another implication, Bondo adds, will be an increasing convergence between mobile wallets and cards, as more card payment platforms seek to integrate mobile wallets. Last year, Safaricom, a Kenyan mobile network operator, partnered with payment processor Visa to enable the development of products that will support digital payments for customers of M-Pesa, the service provider. mobile money of the company.

The partnership between Mastercard and Airtel Africa demonstrates that traditional payment service providers are making strides in adopting non-traditional payment technologies, said Lisa Kimathi, senior research associate at Standard Investment Bank in Nairobi. Payment service providers are likely targeting a one-stop-shop business model. As a result, “we expect to see healthy competition on the payments front, as well as innovations in products and services, a welcome development in a continent where a significant percentage is unbanked,” she says.

“Mobile money has opened up remote areas and launched contactless access to financial services, among many benefits,” Kimathi said. “We have not yet experienced its full potential. “

Airtel Africa has an existing relationship with Mastercard, partnering in 2019 to allow the phone company’s 100 million subscribers to access Mastercard networks. Last year, Airtel Africa also has partnered with MoneyGram, allowing Airtel Money customers to receive MoneyGram transfers directly to their mobile wallets from over 200 countries around the world.

Airtel Africa plans to list Airtel Mobile Commerce within four years. Airtel Mobile Commerce is currently the holding company for many Airtel Africa mobile money operations, which operate under the Airtel Money brand. The subsidiary operates in 13 African countries and offers mobile wallet deposits and withdrawals, merchant and commercial payments, loans and savings, virtual credit cards and international money transfers.

Mobile money is a competitive arena with a mix of new startups, but dominated by long-standing fintech operations like M-Pesa. Last April, Safaricom and Vodacom acquired the M-Pesa brand of Vodafone in the UK, with ambitious expansion plans.

Despite the massive growth in mobile money services across the continent, businesses have struggled to roll out their services seamlessly across multiple countries.

“Every market is unique, so there is no one-size-fits-all solution,” Kimathi says. “M-Pesa is successful in Kenya but has already failed in some African markets.” Kimathi believes that the experience of Safaricom and Vodacom in different countries will help develop products specifically for each market. “I would see it as a long term plan to be a financial services provider in Africa,” Kimathi said.

Meanwhile, Mastercard’s battle for market share on a global scale is increasingly unfolding through fintech startups, and it has rushed to beat Visa as a partner of digital banks and financial startups. Africa is proving to be an important battleground in this competition.

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About Jerry Richter

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