Africa’s financial landscape is undergoing a massive transformation with the penetration of instant payment systems (IPS) as transactions have surged to unprecedented levels hitting over $1 trillion in 2023.
This record-high cashless transaction was fueled by a massive growth of mobile money operations.
Instant Payment System (IPS) is a way of transferring money from one person to another or businesses in real-time without delays and even on weekends or holidays. IPS is designed to enhance financial inclusion by providing fast, safe, easy, and accessible means of transferring money through mobile phones, bank apps, online platforms, etc.
The latest 2024 State of Inclusive Payment Systems in Africa report reveals that the continent has been making explosive gains in the adoption of digital finance marking positive strides in the financial inclusion agenda.
Growth in Transactions
The 2024 SIPS Report reveals that the continent has been making significant progress in the number of payments African residents make with IPS since 2019. The report noted that the number of transactions, since 2019, has been expanding by 37% every year.
In 2023 alone, the number of transactions using IPSs hit 49 billion. This, the report indicates is almost 50% higher than the number of payments recorded in 2022.
Value of Transaction
The report further indicates that the money involved in this increasing number of transactions has also been growing significantly. The value of IPS payments, the report revealed has also been increasing by 39% each year since 2019.
By the end of 2023, the total value of these transactions have crossed a whopping $1 trillion which is almost 3 times the value of transactions in 2020. In effect, the value of payments increased by 273% since 2020.
The Role of Mobile Money
At the heart of this boom is mobile money, which accounted for 38% of all transactions in 2023. With a whopping $481 billion worth of payments processed via mobile platforms, it’s clear that mobile phones are not just communication tools but vital economic lifelines.
“Mobile money IPS process by far the largest volume of transactions with 38% of total transaction in 2023, while cross-domain IPS process the largest values with US $481 billion in 2023,” parts of the report cited by The High Street Journal read.
This signifies that from urban centers to remote villages, mobile money is empowering millions to send, receive, and store money in real-time, bridging gaps in traditional banking infrastructure.
The significant improvement in the penetration of IPS in Africa is a testament to how the continent is breaking the barriers of traditional banking systems by embracing innovation and technology.
Experts believe the massive explosion of IPS on the continent is setting an example of how technology can democratize access to finance, fuel economic growth, and transform lives.
