South African telecom MTN now counts Mastercard among its investors.
The company announced Monday (Aug. 14) that the payments giant had agreed to a minority investment in its FinTech group, valuing that side of the company’s business at $5.2 billion.
At the same time, MTN made a commercial agreement with Mastercard “to support the acceleration and growth of our fintech business’s payments and remittance services,” the company said in a news release announcing its half-year earnings.
The news is happening during a time of increased investment in Africa’s mobile payments landscape, as telecoms move deeper into the FinTech space.
For example, last month saw the payments infrastructure TerraPay begin a cross-border remittance partnership with Kenyan telecommunications firm Safaricom.
This collaboration uses TerraPay’s remittance provider Mobex and allows more than 30 million M-PESA mobile wallet-holders in Kenya to send real-time payments to Bangladesh and Pakistan. The companies also indicated plans to bring the program to India and Nepal.
The majority of Africans have “embraced technology at scale and managed to leapfrog into the future of digital payments,” Praveksha Maharaj, director of partnerships MEA at Entersekt, told PYMNTS in an interview in July.
But in spite of the increasing popularity of electronic and digital channels in Africa’s financial sector, nearly half of the continent’s population still do not have a traditional bank account and make transactions using cash, putting up roadblocks to access to digital financial services.
Fragmented markets — Africa has 54 countries, more than 1.4 billion people and over 2,000 languages — add further complexity to the situation. There’s also the matter of varied currencies and banking systems creating obstacles for cross-border payments.
“It’s not a one-size-fits-all. It’s not like you could launch something and it would work in all countries,” she said.
Maharaj offered the example of mobile money transfer service M-Pesa, which she said “failed in South Africa, but it’s thriving in East Africa.”
Despite these challenges, Maharaj believes the strong growth in digital payments that Africa has seen in the past decade will continue to foster innovation there and inspire others worldwide.
“I’m very hopeful and think it will continue to go in the right direction as we build solutions that meet customers at their point of need,” she said.