Payment facilities and Africa’s platform ecosystem: What does the data tell us?
Payment facilities and Africa’s platform ecosystem: What does the data tell us?July 1, 2020 •
Payment facilities underpin scaling of Africa’s digital platforms.
Digital platforms, also known as multi-sided marketplaces, are seamlessly matching customers to suppliers of goods and services in e-commerce and other emerging industries, thereby creating new pathways for individuals to participate in the digital economy. At the heart of the rapid rise of Africa’s digital platforms are the payment methods and channels that facilitate and settle end-to-end transactions. As a result of the COVID-19 crisis, digitisation of economic transactions and the supporting payment mechanisms are prioritised as consumers, workers and MSMEs aim for contactless payment.
Platforms are enabled by different payment methods through various points of interaction i.e. payment channels or gateways (predominantly digital in nature). These payment services are usually the first layer of financial services offered by digital platforms: Buyers want delivery of goods upon completion of payment, but sellers are only willing to deliver after payment has been confirmed. To address this, platforms have introduced payment services that allow instant and irrevocable payments at delivery and/or reclaims by buyers and that is fully integrated into the platform ecosystem, thereby building trust between the different sides of the platform network.
In this short note, we discuss the role of payments along the maturity cycle of digital platforms, and we highlight key trends emerging in the payment services being offered by digital platforms. This is based on a systematic review of 365 unique digital platforms that operate across eight African countries.