• Monday, May 20, 2024
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Telco, fintech partnerships key to Africa’s digital economy — Elliott

Telco, fintech partnerships key to Africa’s digital economy — Elliott

Mastercard recently bought a minority share of MTN Group’s fintech business for $200 million. In this interview, Mark Elliott, President of Africa at Mastercard, speaks to Boluwatife Omotayo on how this collaboration will expand financial inclusion in Africa and more.

Talk us through Mastercard’s recent investment of $200m for a minority stake in MTN’s fintech business.

In Africa, where it is essential that we reach and include more people in the digital economy, mobile network operators and fintech companies are important partners. We recently concluded an agreement for a minority investment into MTN Group Fintech and then announced a multi-market agreement that will set in motion a new era of collaboration.

Following MTN’s filing with the Johannesburg Stock Exchange in February this year, we can confirm that MTN signed definitive agreements with Mastercard for a minority investment of up to $200 million puts the valuation of MTN Group fintech at about $5.2 billion on a cash and debt-free basis.

What this means is that together, MTN and Mastercard can work to connect millions of people and small businesses across Africa with digital tools to transact through secure mobile payments, expanding access to the benefits of the cashless digital economy. The partnership will also see Mastercard support MTN’s ambition to grow into a major fintech platform that can add even more value for both merchants and consumers on the continent.

What is the scope of this partnership?

The scope of our partnership is huge and will have a far-reaching positive impact on people across 13 markets in Africa including Benin, Cameroon, Cote d’Ivoire, Eswatini, Ghana, Liberia, Nigeria, Republic of Congo, Republic of Guinea, Rwanda, South Africa, Uganda, and Zambia. Our joint efforts will help strengthen local infrastructure for digital payments, support potential expansion of transactions in the future, and drive financial inclusion through access to assets.

Specifically, we want to focus on key areas where we believe we can add significant value. First, we will be launching a prepaid virtual card tailored to MTN’s MoMo customers. This, in turn, will grant users access to over 100 million acceptance locations worldwide. The first market where this will go live is Rwanda with other markets to follow. We’ll also be looking at how we can empower MoMo merchants to seamlessly accept card payments, enhancing the platform’s instant cross-border money remittance services and capabilities. The ability to safely send and receive funds is such an important component of advancing community prosperity and I’m pleased that we’ll be spearheading positive user experiences on this front.

Then there are the micro, small and medium-sized businesses, which are vital to the sustainable growth of all African economies. Our collaboration will mean we can connect more of these enterprises to tools like Mastercard’s SME-in-a-Box, a low-cost payment solution that enables small business owners to set up an e-commerce shopfront and accept a range of digital payments from their customers, such as QR enablement and Tap on Phone. This ultimately also elevates the customer experience and reduces business costs. And finally, but equally important, is how we build trust and confidence, by providing cybersecurity solutions to MTN’s operations to also increase customer loyalty.

Read also: MTN’s FX-induced loss steals shine of record Q1 performance

How does this deal drive MoMo’s plan to address cross-border payments in Africa?

Sending money back home can be a daunting task for people in Africa. What should be a straightforward process often becomes a laborious, stressful situation, involving high transfer fees, security challenges, long waiting periods, and lots of admin. It can and should be simpler for people to get their earnings to their families, and for businesses to operate with confidence across borders, growing both their reputation and bottom line.

Locally, Mastercard has partnered with various fintech organisations in providing a gateway to financial inclusion as remittances are more than just money transfers for Africans – it’s a vital economic pillar that helps families to support themselves.

Through this partnership, consumers will now have expanded reach for mobile money remittance services – both inward and cross-border in Africa. In Sub-Saharan Africa, remittance flows were $54 billion last year, and the World Bank estimates that number to grow 2024 by 2.5 percent. Also, GSMA’s latest mobile money industry report notes that nearly a third (30 percent) of international remittance value in Sub-Saharan Africa is through mobile money. A single, secure connection to Mastercard Cross-Border Services provides reach to 100 countries and more, so the coverage is quite extensive.

Finally, what is the size of Mastercard’s ambition in payment on the African continent?

For us, it’s an exciting opportunity to collaborate and innovate together, combining scale and payments technology expertise to enable secure digital commerce and superior user experiences for Africans. With 1.3 billion people living across the continent, there’s an opportunity and a need to deliver them more efficient ways to pay. Over 90 percent of all payments and transactions in Africa are still made via cash, so there’s great potential for transforming the payments landscape together.

Through our partnership arrangements, we want to support, strengthen, and secure all types of electronic payments and related transactions and interactions. When we look at potential investments, we are focused on finding those opportunities that would be a good strategic fit for us.

While looking ahead at new partners, we consider expanding and strengthening our product and service offerings while exploring what new capabilities those collaborations provide. Deals, like the one with MTN, help us to establish a strategic role in the development of key growth areas to promote global commerce and financial inclusion.

Furthermore, this transformation can happen in various ways, just as payments come in different forms. At Mastercard, we have been deliberate about diversifying our business and differentiating the value that we offer and deliver to our customers, partners, and end users. We are actively looking at how we can provide a broader, expanded choice in payments for people and businesses, and how we can add additional value through extending services like cybersecurity and data analytics. Mastercard is also embracing new networks, and we continue to see strong adoption of our intelligent identity solutions, which enhance experiences while reducing fraud and friction.