AfricaNenda, an independent organization working to develop instant payment systems on the continent, issued a report last November 8 on “the State of the Inclusive Instant Payment Systems in Africa -SIIPS 2023”. The document defines an instant payment system as a payment facility that enables funds transfer and payment confirmation within seconds, 24 hours a day, 7 days a week. They typically operate on a digital platform that can be integrated into mobile banking applications, online services, and point-of-sale terminals.

The report found that Instant payment systems (IPS) active in Africa have handled 32 billion transactions, totaling $1,180 billion in 2022. In terms of numbers, these transactions have recorded an average annual growth of 47% over the past five years. In terms of value, they have grown by an average of 39% over the same period, thanks in particular to the accelerated adoption of digital financial services, driven by the Covid-19 pandemic.

Based on surveys and in-depth interviews with industry leaders, digital financial services experts, micro, small and medium-sized enterprises (MSMEs), and individuals, the report reveals that the continent counted 32 active instant payment systems in 2023, compared with 29 in 2022. These include 29 national systems and 3 regional systems, including the Pan-African Payment and Settlement System (PAPSS). Three new IPS have gone live in the last twelve months: EthSwitch (Ethiopia), Virement Instantané (Morocco) and PayShap (South Africa). Seven countries have more than one IPS, but these systems are interoperable with one another only in Ghana.

Overall, 27 African countries do not currently have an instant payment feature, but this number is expected to decrease significantly in the coming years. Especially since 17 new national IPSs and three regional IPSs are already in development.

USSD protocols remain the most used channel

The 32 instant payment systems listed in Africa are divided into four distinct categories. First, there are cross-domain IPS that allow interactions between bank accounts and mobile money wallets. These IPS are now dominant (14 IPS in total). Next are bank IPS (10) and mobile money IPS (7). There is also a single system based on a Central Bank Digital Currency (CBDC), namely the eNaira in Nigeria.

Used for small, frequent payments, Mobile Money IPS accounts for 82% of transaction volume, but only 29% of the total IPS values. Moreover, 75% of IPS support person-to-person (P2P) and person-to-business (P2B) transactions, but only 31% enable business-to-business (B2B) payments. Instant payments from person to government (P2G) and government to person (G2P) remain unavailable in most countries on the continent. Only seven IPS currently integrate G2P payments, such as pension payouts or social transfers.

On another note, Unstructured Supplementary Service Data (USSD) protocols remain the most utilized channel by instant payment systems in Africa. 75% of IPS active on the continent offer this channel. USSD technology also has the advantage of being accessible even on basic mobile phones and significantly contributes to popularizing digital financial transactions. Applications are the second most common channel (72%), although they require the possession of a smartphone and an internet connection. QR code solutions are also steadily increasing.

The report also points out that no instant payment system on the continent has yet reached a level of mature inclusivity, due to regulatory challenges, lack of data transparency, and high costs for payment system providers and end-users. Five IPS, however, are progressing towards mature inclusivity. These are two active systems in Ghana (GhIPSS Instant Pay and Mobile Money Interoperability), GIMACPAY in the Central African Economic and Monetary Community (CEMAC), Natswitch in Malawi and National Financial Switch (NFS) in Zambia. These systems are approaching the ideal state where all use cases are integrated, transaction costs are very low, and transparent and effective redress mechanisms exist.