Africa. Credit and Debit Card Usage in Africa

The increasing role of credit and debit cards in Africa and the challenges EMV companies are facing as they expand to the African market.

A recent report by McKinsey and Co stated that Africa and Middle East trails all the other continents in debit and credit card users. This was attributed to a number of factors including the rural nature of the continent. In the report, it was noted that out of 10 transactions, only 1 of them was done through debit and credit cards. Most Kenyans preferred using cash to make payments.

According to the report, African countries would save billions of dollars annually if people started using debit and credit cards. Fraud, transportation costs, corruption, and handling costs are some of the most common disadvantages of using cash to make payments.

In 2013, Cap Gemini carried out a report that suggested that African governments in Kenya, Egypt, Namibia, and Angola are actively advocating for cashless systems. In Kenya for instance, the government is liaising with the transport industry stakeholders to introduce cashless systems. While the push to have all matatus register for this service has failed, key stakeholders such as banks and matatu owners are pushing for it.

In addition, supermarkets and other retail shops are actively seeking customers to use debit cards instead of cash. All this has seen more Africans turn to debit cards to make payments.

“I prefer using a debit card when shopping. Handling cash is just too hectic for me,” said Kevin Odwenya, a shopper at Nakumatt Uganda.

Middle Class Expansion

The middle class in many African countries is on the rise. As a result, financial inclusion has increased in most countries with banks setting up branches in the very rural villages. Mobile money has also added to the number of people who have access to financial services.

According to a report by the African Development Bank (AfDB), 60% of Africans now have access to financial services, either through banks or mobile. The report also notes that local and international banks are now focusing more on getting clients from the rural areas because they see the potential.

For this reason, the number of people using debit cards has risen. In addition, debit cards are not coming from banks alone but from companies in other sectors. For instance, mobile telephone company Airtel has introduced debit cards in a number of African countries. The debit cards lets people withdraw funds from airtel money through the ATMs. In addition, supermarket chains such as Massmart and Nakumatt have introduced debit cards which customers can use to buy. Nation Media Group, the largest media company in East Africa has also introduced a debit card, Nation Hela that allows people to do online transactions.

EMV Penetration

In Africa, the rate of penetration of EMV (Europay, Mastercard and Visa) has been on the rise. According to, the penetration rate currently stands at 77%. Visa is the market leader in Africa with a market share of more than 60%. It is followed by Mastercard. Other brands which have established a base in the region include: Dinners Club, American Express, and Europay among others.

The biggest concern among Africans has been the security of the new cards with skimming claims being on the rise.

As a result, many African countries have phased out the magnetic strip cards to the much safer electronic chip cards.

Another issue is that many places where many people shop have not accepted these cards. In Africa, most of the trade happens in the open air markets where transactions are cash based and at times barter. Only a few supermarkets and petrol stations accept the new systems.

Credit Cards

While debit cards have gained acceptance in the continent, many people still don’t believe in using credit cards. In fact, only a very small number of people use credit cards in most African countries.

In a report published in 2003, by the National Association of Advancement of Coloured People, most Africans don’t understand how credit cards work. In addition, most of African people don’t work in very well-paying jobs.

Another hindrance to the use of debit cards in Africa is the growth in mobile money and micro lending. This is a situation where people use mobile phones to transact and even borrow money. Companies such as Kiva and safaricom have continued to innovate platforms through which people can borrow money.

Global companies seeking entry in the African market especially in the financial sector face a major problem. In the above report, it has been identified that most of these multinationals have inadequate knowledge of the market. As a result, they rely on reports by multinationals such as Euromonitor which in most cases are not accurate. For people to embrace these technologies, the fact is that the solutions must be tailored to meet the needs of Africans. American or European solutions will not work in the African market.

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