While payment products are quickly penetrating African consumer markets they are primarily used for income dispensing by not for payments. South Africa, Nigeria, Tanzania, Uganda and Egypt have advanced in enabling access to and driving usage of different financial products including payments, lending, long-term savings or investments, and insurance.
A new MasterCard study finds Kenya is in a ‘Payments Ready’ stage when it comes to adoption, with 85% of adults holding a bank, mobile, prepaid or other payment product. A ‘Payments Ready’ country displays a high penetration of payments products at a rate of more than 75% but less than 95%, according to the researchers’ metrics.
However, based on usage of payment products, Kenya moves back to the ‘Early Days’ stage, with only two percent of consumer purchases made electronically, despite 75% adults receiving money via non-cash means. This means that while Kenyans receive a large percentage of their income electronically, they are not using their electronic payment products to transact and depend on cash to do so.
MasterCard Advisors note lending, long term saving and investment and insurance rates in Kenya were found to be at 13.6%, 43% and 3.4%, respectively.
The “A Progressive Approach to Financial Inclusion” report from MasterCard Advisors measures adoption and degree of usage of financial products for 30 countries globally.
The four stages of adoption of payments products are:
• Early Days: This stage represents the beginning of the progression. For all countries, adoption of payments product is less than 50 percent, and adoption of other products is typically very low (less than 25 percent). Countries include Pakistan, Egypt, Indonesia, Bangladesh, Philippines, Peru, Nigeria, Mexico, Columbia, Tanzania, Uganda, India and Saudi Arabia.
• Transitioning: In this stage, payments product adoption starts to break out with over 50 percent penetration. In several countries, adoption of one or more products also begins to gain traction and catch up with payments adoption (e.g., long-term savings/investments in China, credit in Italy). Countries include Brazil, Russia, South Africa, Malaysia, Italy, China and Poland.
• Payments Ready: In this stage, payments product adoption reaches a critical threshold of mass adoption (greater than 75 percent). Countries are expected to be ready from a payments perspective (e.g., infrastructure) to enable advanced levels of some other products. Here advanced levels vary by product and are based on current levels of adoption in the 30 countries, specified as over 60 percent for lending, over 70 percent for long-term savings/investments, and over 45 percent for insurance. Countries include US, UAE and Kenya.
• Most Advanced: In this stage, payments product adoption is ubiquitous, and adoption of all other products is expected to be at advanced levels. Countries include Spain, Belgium, UK, Japan, Germany, Sweden and Singapore.
For more data on Financial Inclusion access CardData®. For information and commentary on Financial Inclusion visit the searchable CardFlash® Library of more than 58,000 articles published since 1995. RAM Research® forecasts on Financial Inclusion are available exclusively through CardWeb.com.®