USSD remains the go-to choose for Africans, outshining alternatives like apps and QR codes. The simplicity and user-friendliness of USSD-based transactions have kept them at the forefront, particularly for mobile money and cross-domain transactions. Notably, USSD transactions accounted for a substantial 70% of instant payment channels as of June 2023, playing a pivotal role in facilitating transactions that extend beyond the realms of traditional mobile money services, including inter-institutional transactions.
In both Ghana and Kenya, mobile money systems, especially those utilizing offline channels like USSD, enjoy popularity and strong customer support compared to card-based systems. This preference aligns seamlessly with the fact that 60% of Ghanaians and 69% of Kenyans possess mobile money accounts. However, the simplicity of USSD comes at a cost, as it has been identified as a potential hindrance to a smooth payment experience. According to AfricaNenda, a digital payment strategy organization, complex USSD menus and transaction failures are perceived as obstacles, as highlighted in their Inclusive Instant Payment Systems (IIPS) report.
The realm of cross-domain instant payment systems enhances interoperability between banks and non-banks, facilitating seamless transactions across both bank and mobile money accounts. While app channels follow USSD in terms of popularity, they introduce friction points like the need for smartphones and internet connectivity, with adoption rates standing at 51% and 43.2%, respectively.
Another emerging player in the payment scene is the growing acceptance of quick response (QR) codes as an alternative channel. Cross-domain and bank IPS boast a diverse array of channels, with mobile money instant payments favoring agent, USSD, and app channels. The November 2023 Instant Payments Systems (IPS) report by AfricaNenda underscores this diversity, showcasing the evolving financial services landscape in Africa.
AfricaNenda also sheds light on the popularity of electronic money (e-money) instruments, widely supported by mobile money and cross-domain instant payment systems. Cross-domain systems extend their usage to commercial money instruments like credit and debit electronic funds transfer (EFT), while bank IPS focus primarily on credit EFT, considering debit EFT as a secondary instrument. This diverse range of instruments underscores the varied payment methods in use across different payment systems.
The importance of Inclusive Instant Payment Systems (IIPS) is emphasized, especially with the growing demand for instant digital payments. Notably, in 2021, 50% of Sub-Saharan African adults engaged in digital payments, reflecting a significant increase from 34% in 2017. The report provides valuable insights into the evolving financial landscape, highlighting the dynamic nature of payment preferences across the continent.
