African consumers prefer digital payments over cash, a new study has revealed underscoring what it described as “a seismic shift in consumer preference” across the continent.
The new survey by RegTech Africa and AgpayTech, which polled 2,591 respondents across the continent, found that over 91% of respondents prefer digital payment methods over cash, according to its authors.
The study titled “African Digital Payment Systems and Consumers Experience in 2023” highlights several key trends across the continent:
“The survey also highlights a significant knowledge gap regarding Central Bank Digital Currencies (CBDCs). While CBDCs have the potential to revolutionise financial infrastructure, a staggering 69% of participants admitted to having no knowledge of them.”
Dominance of Mobile Banking: The survey found that a significant 73.5% of respondents use mobile banking apps for various transactions, with an even more impressive 85.5% utilising these apps for fund transfers and other payments. According to the research, this widespread adoption reflects a decline in reliance on physical bank branches, with many users abandoning in-person visits altogether.
Demand for Unified Platform: Interestingly, 76% of respondents expressed a desire for a consolidated digital payment platform. Instead, they are “advocating for accessible application platforms to consolidate their myriad of payment accounts seamlessly.”
Limited CBDC Awareness: The survey also highlights a significant knowledge gap regarding Central Bank Digital Currencies (CBDCs). While CBDCs have the potential to revolutionise financial infrastructure, a staggering 69% of participants admitted to having no knowledge of them. The report further revealed that “when presented with the concept of CBDCs, sentiments were divided, with only 19.8% expressing agreement with their issuance, while 47.9% opposed the idea, and 32.3% remained uncertain,” thus highlighting the need for widespread education initiatives to familiarize the public with CBDCs.
The mixed grill of digital payments
Despite the convenience of digital payment solutions, 45.3% of consumers expressed concerns about high transaction charges, fraud, and perceived security vulnerabilities. Addressing these concerns and implementing robust safeguards, the report authors noted, will be crucial for fostering trust and further accelerating the digital payments revolution in Africa.
The report also identified growing interest in innovative payment solutions like “buy now, pay later” schemes, WhatsApp banking, and open banking.
“As Africa embraces the digital revolution, it’s imperative for stakeholders to prioritise interoperability and user-centric design in crafting next-generation payment solutions,” Cyril Okoroigwe, CEO of RegTech Africa said. He further noted that “by addressing consumer concerns and fostering collaboration across the financial ecosystem, we can unlock the full potential of digital payments to drive inclusive economic growth.”
Richard Amoah, CEO of AGPAYTECH Ltd said that, “these findings mark a pivotal moment in Africa’s journey towards a digital-first economy,” remarked “The overwhelming preference for digital payment solutions underscores the transformative potential of fintech innovation in driving financial inclusion and economic empowerment across the continent.”
RegTech Africa, a research and advisory platform that specializes in financial technology (fintech) and regulatory compliance across Africa, offers insights and data to stakeholders navigating the evolving FinTech landscape.
Agpaytech is a FinTech company that focuses on building robust technologies for e-commerce payment processing, specifically for Payment Service Providers (PSPs). They also offer a range of services, including compliance solutions, remittance processing, and digital currency technology, the company said.
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