How contactless and cashless payments and mobile money are dethroning cash in Africa

  • E-payments accounted for over 47 billion individual domestic transactions in 2020
  • Africa saw over 27.5 billion mobile money transactions in 2021
  • There are 144 mobile money services in Sub-Saharan Africa

Contactless payments and mobile money form an integral part of the African retail revolution, with numerous countries on the continent seeing a dramatic increase in consumers who utilize these payment methods for goods and services. Electronic payments are fast displacing cash, and even cryptocurrency and digital currencies are emerging as alternatives to traditional transacting.

What are cashless and contactless payment?

While many people use the terms “cashless” and “contactless” interchangeably, it’s interesting to note that there is a difference between these two forms of payment.

Contactless payments occur when consumers buy with contactless debit, credit cards, or mobile phones. Contactless payment cards and authorised mobile devices with services like Apple Pay or Google Play are equipped with Radio Frequency Identification (RFID) technology. The customer must bring the card or device close to the vendor’s point-of-sale terminal – provided it is equipped with contactless payment technology. Once a connection between the card or mobile device and the terminal is established, the user will hear a beep or see a green light or checkmark on the terminal before the transaction goes through.

Apple Pay and Google Play do not authorise the transactions. These services merely tokenize shoppers’ payment cards and pass the information on to the credit card network of the vendor’s device.

In contrast, cashless payments cover a broader range of payment methods. In addition to contactless payments, it includes web-based avenues like bank transfers, mobile payments, payment apps, and digital wallets.

There’s a lot of money in going cashless

While most Africans still prefer to pay in cash, this will likely change as these forms of payment gain momentum in the coming years.According to a recent report by McKinsey, an influx of new investments and regulatory shifts continue to shape how Africans transact.

Banks and fintechs continue developing innovative solutions to reduce friction in payments. 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.

Around 80 percent of payments experts who participated in McKinsey’s survey believe that the shift to e-payments will not only continue but accelerate, with 84 percent expecting e-payments to grow by at least 30 percent annually through 2025. A third of respondents expect a 50 percent annual increase.

Overall, they anticipate that between 2020 and 2025, the e-payments market will grow by around 150 percent to reach almost $40 billion in revenues from domestic payments alone, with about 188 billion in transaction volumes.

The pros and cons of mobile money, cashless payments, and contactless payments

The advantages of cash-free transactions

Apart from its convenience, contactless payments are widely viewed as more secure than cards with magnetic strips, which fraudsters can easily skim. Investopedia explains the information submitted during a contactless transaction is encrypted, meaning it’s difficult to intercept or steal. All transactions are documented, making it easier for the customer and business to keep tabs on their funds. Vendors also enjoy the benefit of having less cash on-site, reducing security risks.

In addition to sharing most of the benefits of contactless payments, cashless payments like money transfers make it easier to make international transfers, reducing the hassle of exchanging cash payments between currencies. Users also save money on storing and depositing funds.

Mobile money is especially beneficial in developing economies, offering financial inclusion to consumers who don’t have access to banking. It also provides a way to participate in the economy without a bank account. In addition to this benefit, users can send money to recipients in other countries. From a security perspective, mobile money also offers added security thanks to the fact that the identities of senders and receivers are verified with each transaction.

The disadvantages of going cash-free

While there is much to be said about the convenience of going cashless, consumers still face the risk of less privacy, hacking, and payment fraud. The security measures of some contactless cards and devices are particularly questionable, as customers are usually prompted only to provide a PIN once a high transaction amount (specified by the bank or local regulators) is reached. As a result, thieves and fraudsters can easily make repetitive transactions below the limit before the account owner might notice something is awry.

In addition to sharing the same cons as contactless methods, cashless payments face a more significant cybersecurity threat due to the plethora of online payment avenues at users’ disposal. As a result, security measures might be inconsistent. All forms of cashless payments have a firm reliance on electricity and connectivity, which can be problematic in some regions of Africa – especially in rural areas, where access to power and connectivity remain limited.

The processing costs of cashless transactions can prove costly – especially small businesses might be deterred from expenses like these.

Despite its verification capabilities, users of Mobile Money can still fall victim to fraud. GSMA warns one of the most common methods is to send fake messages called “Smishing“, which ask for Bank details, and because of this, many users fall victim to scams and theft. Considering high-end smartphones still are limited in Africa, some mobile money apps might not be available to users of basic or feature phones.

Africa is embracing mobile money

In Sub-Saharan Africa alone, 144 mobile money providers are driving change in how consumers transact. According to Statista, players like M-Pesa (by Safaricom), MoMo (by MTN), and Orange Money account for most of the market share.

Mobile money services are provided by telecommunication companies and supported by a network of licensed agents. These mobile money services allow registered users to deposit cash into a virtual wallet and use those funds for payments and purchases, including peer-to-peer (P2P) payments.

According to 2021 data from the GSM Association, registered mobile money accounts in Africa grew 12% to 562 million in 2020, while monthly active accounts were 161 million, an 18% increase. Total transactions hit 27.5 billion (up 15%), valued at $495 billion (up 23%). GSMA reports it has 171 active mobile money services.

Mitigating payment fraud

The main concern about cashless and contactless payments is security, considering different frauds and scams like SIM swap fraud affect customers and businesses.

According to the 2022 Cybersource Global Fraud Report, payment fraud has led to a revenue loss of 3.6 percent in global eCommerce in 2022 – up from 3.1 percent in 2021. As a result, vendors are under increasing pressure to ensure that their customers’ payment avenues are safe and compliant.

As a result, retailers looking to adopt contactless payment avenues must ensure the customer journey remains secure. However, one of the biggest concerns about adding additional layers of security to verify their identities is that it can cause friction in the customer experience. Providing online customers with fewer steps to keep their identities and money secure also means less cart abandonment and more customer loyalty.

There is a variety of solutions available to achieve this:

  • Two-factor authentication (2FA) adds an extra layer of security that requires users to use both their online password and their mobile phone to verify their identity. A one-time PIN (OTP) number is generated and sent to the user’s mobile device via SMS or WhatsApp, and the user types it into the application to confirm their identity.
  • A SIM Swap Check is another to improve customer security with mobile payments. This will help to ensure the account-related information reaches the customer it’s intended for and eliminates potential fraud or identity theft activities.
  • While the African market has yet to adopt this security measure, silent mobile verification can help provide an uninterrupted onboarding experience for customers. Rather than receiving an email or SMS with a 5-digit code, silent mobile verification authenticates app users in less than 5 seconds, requiring no further action.

Cashless and contactless payments will continue to gain a foothold in how African consumers pay for goods and services. And while the impact of security solutions on the customer journey is valid, businesses do not have to compromise if they implement practical solutions to bolster their security.

Most importantly, businesses are guaranteed to gain more customers and retain them if they demonstrate that they take security seriously – especially in a market like Africa, where many regions still are in the early adoption phase.

A glimpse of cashless and contactless payments: Morocco, Kenya, Nigeria, and Senegal

Most importantly, businesses are guaranteed to gain more customers and retain them if they demonstrate that they take security seriously – especially in a market like Africa, where many regions still are in the early adoption phase.


Cash remains king in the Nigerian retail sector. However, more people are using credit cards and mobile money apps. The Nigerian government encourages digital transacting as it provides an opportunity to boost tax revenues. According to data from the Nigeria Inter-Bank Settlement System (NIBSS), Nigeria recorded more than 655 million point-of-sale (POS) transactions valued at $13 billion in 2020, a 50 percent increase over 2019.

The rising availability of 4G networks and smartphones also contributes to the increase in digital transacting. According to research conducted by Kearney, smaller retailers sell products on social media channels like Facebook and Whatsapp, especially when consumers opt for cash-on-delivery.


Kenya is taking the lead in Africa with digital payments. According to a 2022 survey by Visa, 71 percent of businesses in Kenya use cash as a means of payment, compared to the much higher use of cash in South Africa (91 percent) and Nigeria (94 percent). Most digital payments are concentrated on food, entertainment, tours and accommodation, agriculture, transport and delivery, and professional services.

An impressive 94 percent of Kenyans use mobile money, and 44 percent of them increased their usage of mobile money during the Covid-19 pandemic. M-PESA, launched by Safaricom in 2007, is widely viewed as Africa’s biggest success story in the mobile money market – and it originated in Kenya, establishing it as a leader in financial inclusion. No fewer than 30 million Kenyans utilize this service.


An impressive 67 percent of Morocco’s online consumers pay their bills online, according to payment service CMI.

Factoring in a broader range of contactless payment options, the 2022 Mastercard New Payments Index found 76 percent of Moroccans used at least one emerging payment method in 2021. An impressive 25 percent used digital money transfer apps, and 20 percent used tappable smartphone mobile wallets.

The uptake of mobile money in Morocco remains limited. According to the World Bank, just 6 percent of Moroccans above 15 had a mobile money account in 2021, up 1 percent from 2017.


According to DataReportal, between 2021 and 2022, 39.5 percent of the population made digital payments, 29.4 percent used online banking, and 9 percent paid bills online.

Mobile money payments are taking up a significant portion of transacting. No fewer than 31.8 percent of consumers have mobile money accounts. This is particularly significant, considering only 20.4 percent of Senegalese have accounts with financial institutions.

The leading player in Senegal’s mobile money market is Wave, with four to five million people using the service. Wave processes billions of dollars in annual volume and has partnerships with UBA and Ecobank for its Senegal operations.

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Jan 31st, 2023
8 min read