In many emerging economies the financial culture is based almost exclusively on cash. In Africa, more than 90 percent of transactions are carried out in cash, compared to 41 percent of the transactions in North America.* An unfortunate result is that currency is often kept out of local banking systems, creating a primary obstacle to economic development, and adding costs to the African banking system. Efforts to address this deep-rooted problem have resulted in financial stagnation of local economies throughout the emerging markets.
The Shortfalls of Prepaid Cards in Africa
The bank prepaid debit card business, along with various mobile money solutions in Africa have delivered the potential promise. Both are utilized almost exclusively for the immediate withdrawal of credited funds, with scant benefit to the economy. Indeed, the Prepaid-Card system is the preferred response to economic and financial needs in many of these countries if implemented in the proper way. Reloadable cards are narrowly presented as a means to deposit money on a card and to withdraw it at the next available ATM, without considering the leverage and advantages of the Visa global payment network that we employ.
Market Knowledge Creates Solutions
It is our belief that the lackluster performance of alternative payment solutions in Sub-Saharan Africa, as well as in other emerging economies, is due to the inability to execute proven global tools at the local level. The tools to address the financial challenges within these highly unbanked economies do exist. After nearly a decade of analysis and product testing in different African countries, Emergent International Payment Systems launched a global solution that involves the joint efforts of the economic and financial partners within multiple counties in Africa and the Indian Ocean, while capitalizing on the advantages of the Visa global payment network.
*Roaring to Life: Growth and Innovation in African Retail Banking by McKinsey & Co.