With the rise of digital financial services in Africa, the payment landscape has been transformed in recent years. Mobile money services such as M-Pesa have revolutionized how people send and receive money, making financial transactions faster, more secure, and more convenient. However, there is still a lot of room for growth and innovation in the African payment space. While we may have figured out how to send money to each other, sending money to and from the diaspora is still challenging.
So let’s explore how CashApp, a popular mobile payment service in the United States and other major continents, could tap into the African market and fill the void left by other providers like PayPal which is just a nightmare for Africans to use further enhancing CashApp’s potential in the region.
The African Payment Market Landscape
Before we dive into how CashApp can succeed in Africa, let’s first take a look at the current payment market landscape. M-Pesa, which was launched in Kenya in 2007, has become one of the dominant mobile payment platforms in Kenya with over 40 million users in ten African countries. Other digital payment providers have also entered the market, such as Nigeria’s Paga, South Africa’s SnapScan, and Zimbabwe’s EcoCash.I doubt you have heard of them, which means, despite the growing number of players, there is still plenty of untapped potential.
The Opportunity for CashApp
Hear me out, one reason why I think CashApp could succeed in Africa is that it offers a unique value proposition. Unlike other payment providers, CashApp is primarily a peer-to-peer (P2P) payment service. It allows users to send and receive money from friends and family instantly, for free.
You may tell me, “Nigel, if the problem is cross-border payments, we have Bitcoin” well, CashApp also allows users to buy and sell Bitcoin and stocks, further differentiating itself from competitors, so you have, say, Binance and M-Pesa in one super App. Now imagine CashApp works in Africa and just like Paypal, you can withdraw your money to say, M-Pesa or Paga?
So why CashApp and not other mobile payment apps like Venmo? Why are we importing fintech when we have so much potential as Africans to export the already working solutions? Personally, I think CashApp is just a bit more popular and could be the one answer to a global mobile payments solution. Another advantage of CashApp is that it is owned by Square which has a track record of innovation and disruption in the financial industry, having launched several successful products such as Square Register and Square Capital. The company has a market capitalization of over $100 billion, which could provide CashApp with the financial resources to invest in marketing, infrastructure, and product development in Africa. Exporting M-Pesa would be a little hard to say the least
Integrating with M-Pesa
Instead of looking at local mobile payments in Africa as competition, one way CashApp could succeed in Africa is by partnering with these mobile payment solutions in Africa, For instance, by integrating with M-Pesa, CashApp could leverage its existing user base, brand recognition, and network of agents to expand its reach in Africa. M-Pesa has over 500,000 agents across the continent and millions of users, which could provide CashApp with a ready-made distribution network for its services.
CashApp would instantly kill Paypal, which in recent years has faced criticism for its treatment of African users. “Paypal has been stealing from Africans for years & calling it “fraud management.” One can barely transact $100 without them suspending your account together with your money.” A disgruntled user states on social media. And they are not alone, thousands of Africans flock to social media daily to complain about PayPal withholding their cash after payments are done on the network.
This presents an opportunity for CashApp, which could position itself as a more inclusive and accessible alternative to PayPal. CashApp’s P2P functionality and low transaction fees could be particularly appealing to African users who have been suffering at the hands of PayPal.
Challenges and Considerations
While CashApp has a significant opportunity in Africa, there are several challenges and considerations that it will need to address to succeed. One of the biggest challenges will be regulatory compliance. Each African country has its own set of regulations governing financial services, and CashApp will need to navigate these regulations to operate legally. This will require significant investment in legal and compliance resources, as well as building relationships with local authorities and stakeholders. I’m pretty sure there would be other challenges but I feel like the pros outweigh the cons.
To sum it up, CashApp has a significant untapped opportunity in Africa, where it could provide a unique value proposition and address the void left by other payment providers. By integrating with companies like M-Pesa and addressing some of the challenges of operating in Africa, CashApp could become a leading player in the African payment market if it wanted to.
What do you think? Can CashApp take PayPal?