Interoperability drives mobile payments

The proliferation of mobile devices in Africa has increased in the past few years and there is no doubt that these devices are moving beyond their role as phones and becoming enablers for a wide range of functionalities, from mobile TV to electronic payments.

According to industry reports – mobile penetration rates stand at 96% globally – 128% in developed countries and 89% in developing countries. In African alone, over the past three years the broadband growth has increased from 2% in 2010 to 11% in 2013.

The latest Analysys Mason Report study reveals that there will be more smartphones than banked population by 2016 due to accessibility of affordable smart phones. This growth challenges service providers to deliver solutions that could be consumed through mobile platforms.

Interoperability in the electronic payment industry will play a huge role in ensuring that banking solutions and payments are also delivered through mobile platforms.

It is fundamental for the banking industries in African regions – including SADC – to recognise interoperability as a catalyst for future payments.

Africa is quickly catching up with developed countries in many areas, including the banking payment systems. Last year the Committee of Central Bank Governors (CCBG) commissioned the SADC Payments Integration Project, which is aimed at creating an integrated payment system that will enable regional interoperability of financial transactions across all levels and types of user.

A key feature of the system is the introduction of a single currency settlement for all cross- border transactions, through a single settlement authority (SIRESS).

This feature serves to standardise and simplify the way in which banks in different countries are able to handle financial transactions, leading to increased efficiencies and reduced transactional costs.

BankservAfrica encourages SADC banking interoperability of financial transactions across all users and the integrated payment system will do exactly that.

BankservAfrica’s role in the SADC Payments Integration Project is to assist in creating a regional automated clearing house (ACH) to process card and EFT-based transactions, in accordance with agreed system standards and timelines.

A critical component of this SADC Payments Integration Project is the operators who will perform the interbank transaction switching and calculation of settlement obligations between banks.

This operator group comprises various service providers, offering a wide variety of services such as card-based processing, direct credit and direct debit processes, mobile transacting and cheque processing to financial and other corporate institutions.

Once the project goes live both citizens and financial institutions that are permitted to participate in the payments system businesses within the SADC region will benefit.

High volume EFT transactions, ATMs, credit and debit card transactions will be facilitated at competitive rates, money will be transferred across borders at affordable rates and the unbanked population will be able to participate in the banking system. Interoperability between the various mobile platforms will also be created.

BankservAfrica recognises the value of the initiative for the SADC region and is excited to be able to partner for growth in Africa.

The SADC Payments Integration Project is expected to go live in the 3rd quarter of 2013.

By Lionel Slowe, head of the SADC project at BankservAfrica

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Interoperability drives mobile payments