Mastercard Bets Big On Cross-Border Payments In Africa

August 16, 2023
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Two of Africa’s largest telcos are set to partner with Mastercard on new initiatives to improve the continent’s cross-border payment options. Meanwhile, Mastercard is set to invest directly in Africa’s fintech sector.

Two of Africa’s largest telcos are set to partner with Mastercard on new initiatives to improve the continent’s cross-border payment options. Meanwhile, Mastercard is set to invest directly in Africa’s fintech sector.

Mastercard has unveiled a new partnership with Airtel Africa that will see the two companies work together on a new remittance service.

In a statement, Mastercard said the service will span all 14 jurisdictions where the Indian-owned telco operates, serving a potential market of more than 100m customers.

As the service is gradually phased in, the two companies will be able to tap into an estimated $95bn of remittance payments that enter the African continent every year.

Through a single point of access, Mastercard Cross-Border Services will support the outward transfer of funds from Airtel’s 14 markets, or the inward transfer of funds from more than 140 countries worldwide.

The 14 markets are Chad, Congo Brazzaville, Democratic Republic of Congo, Gabon, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Tanzania, Uganda and Zambia.

How does it work?

When an individual initiates a remittance transaction, a payment request will be received by an originating institution.

That originating institution then sends the payment to Mastercard Cross-Border Services, where it is subject to anti-money laundering (AML) and real-time transaction screenings.

Once approved, Mastercard executes the payment to a receiving institution that handles the “last-mile delivery” to the payee, alongside further AML checks and transaction screening.

Transactions sent via Mastercard Cross-Border Services can be received via multiple end-points, including bank accounts, mobile wallets, payment cards or cash-out locations.

Under the partnership with Airtel Africa, users will be able to receive remittance payments via the Airtel Africa app, which allows users to access their Airtel Money account.

Already, Airtel Africa customers can pay bills, send payments, buy goods and services, withdraw cash and order a virtual Mastercard payment card via Airtel Money.

Ngozi Megwa, SVP of Digital Partners and Enablers for Europe, Middle East and Africa at Mastercard, said the remittance partnership represents an expansion of Mastercard’s existing payment ties on the continent.

“As a global technology company with a long history in Africa, Mastercard is committed to the continent’s growth and connecting its people to convenient digital solutions,” she said.

“We are proud to continue building on our partnership with Airtel Africa by adding more value and choice for its customers.”

According to Mastercard’s 2022 Borderless Payments Report, three-quarters of consumers who send and receive cross-border payments now do so through mobile apps.

“This growth in cross-border mobile transactions has created a genuine need to make cross-border remittances easy and secure for both banked and unbanked consumers,” said Mastercard.

Mastercard Cross-Border Services has its origins in Mastercard Send, an account-to-account service that was launched in 2017. Mastercard Send can be used for cross-border transfers and still operates under a separate brand.

In 2019, Mastercard acquired Transfast, a dedicated cross-border account-to-account network, which was followed in 2021 by the acquisition of HomeSend, a cross-border service that included mobile functionality.

Mastercard to invest in Africa’s largest telco

In addition to the Airtel partnership, Mastercard is moving towards a major investment in MTN Group, a publicly traded telco based in South Africa.

Based on both revenue and total subscribers, MTN Group is the largest telco in Africa, and its subsidiary, MTN Group Fintech, is currently valued at $5.2bn.

In H1 2023, MTN Group said it followed a “bespoke process” to “identify and potentially introduce” strategic minority investors into MTN Group Fintech.

By doing so, MTN Group was able to sign a memorandum of understanding (MoU) that commits Mastercard to making a minority investment in MTN Group Fintech.

“Signing of the definitive investment agreements is expected to occur in the very near term, as we approach finalisation of customary due diligence,” MTN Group said in a statement.

MTN Group also secured commercial agreements with Mastercard to support the acceleration and growth of its payments and remittance services.

Previously, in February 2021, Mastercard entered a partnership with MTN Group to provide cross-border e-commerce payments to MTN customers in 16 countries.

Using a Mastercard virtual payment solution linked to the MTN MoMo mobile wallet, the partnership allows consumers and merchants to make and receive cross-border e-commerce payments without a bank account.

In Sub-Saharan Africa, mobile devices are the primary channel used to connect to the internet, and there are estimated to be twice as many mobile money accounts as bank accounts in the region.

However, consumers and merchants are typically restricted to transacting with local businesses.

“At Mastercard, our innovation strategy is based on partnerships and collaboration,” said Amnah Ajmal, EVP for market development in the Middle East and Africa at Mastercard.

“Partnering with MTN allows us to accelerate our global pledge to connect 1 billion people to the digital economy by 2025, bringing us closer to a world beyond cash.”

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