$40 BILLON US dollars - Digital native Nigerians can add to the economy

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Human commerce has always sought more efficient mediums of exchange, and now this innovation is accelerating. The 21st century has witnessed dramatic shifts in how people pay for goods and services, with electronic payments increasingly displacing cash and, more recently, cryptocurrency and digital currencies emerging as alternatives to traditional conceptions of money

Africa has kept pace with—and in some cases even led—this innovation, and an influx of new investments and regulatory shifts continues to shape the e-payments landscape on the continent. Although cash is still king in Africa, a McKinsey survey suggests that its supremacy is likely to be challenged in the coming years as e-payments gain momentum.2 With banks and nonbank players alike innovating to reduce friction in domestic and cross-border payments and deliver much-needed new solutions to consumers and businesses, Africa’s domestic e-payments market is expected to see revenues grow by approx­imately 20 percent per year, reaching around $40 billion by 2025,3 compared with about $200 billion in Latin America.4 By comparison, global payments revenue is projected to grow at 7 percent annually over the same period.

This article presents insights from African experts along with our analysis of what is driving the growth of e-payments on the continent (see sidebar, “Our perspective”). It highlights the challenges and possibilities for organizations looking to find their niche in this rapidly evolving and increasingly competitive landscape.

Globally, electronic payments are a booming industry, having attracted more investment than any other financial-services sector and delivered the highest returns and growth in the sector over the past decade.5 Africa has been no exception. In 2020, Africa’s e-payments industry, across domestic and cross-border payments, generated approxi­mately $24 billion in revenues, of which about $15 billion was domestic electronic payments. The domestic electronic-payments revenue of $15 billion was generated from 47 billion individual trans­actions totaling just over $800 billion of transaction values.6 However, on average, only 5 to 7 percent of all payment transactions in Africa were made via electronic or digital channels, compared with 50 percent or more in Turkey, for instance.7 This means e-payments are a major growth opportunity on the continent, especially as the convenience and scalability of payment methods improve and supporting infrastructure develops. Read the rest here