A platform for change

Africa’s payments landscape is evolving at dizzying speed. Abdeslam Alaoui Smaili, CEO of multi-national technology company HPS, based in Morocco, discusses how banks can best meet the challenges and opportunities

The payments landscape in Africa, in recent years, has been in a state of friction as financial technology has rubbed up against a continent where vast swathes of the population remain unbanked.

The expansion of financial services, notably by m-money and e-money providers, has continued apace across a region with huge mobile phone penetration. That said, payment companies have continued to face an uphill battle in countries where physical currency remains king – it accounts for as much as 94 per cent of retail purchases. As Raghav Prasad, divisional president of Mastercard in sub-Saharan Africa said last year: “Our biggest competitor is cash.”

Yet change is afoot, with coronavirus proving a catalyst for reforms that otherwise might have taken years to come to fruition.

Millions of Africans have experienced the virtues of a cashless society, as African governments turned to digital payments to financially support citizens unable to work during the pandemic. That has, in turn, forced the modernisation of payment infrastructures.

Meanwhile, the private sector continues to drive digital adoption. Home-grown technology company HPS, for example, created the acceleration that we have been looking for – but there is a lot more to do.

recently partnered with Bank of Ghana subsidiary Ghana Interbank Payment and Settlement Systems (GhIPSS) to launch the Ghana Universal QR Code (GhQR) – the first national, harmonised payment system of its kind on the continent.

Here, Abdeslam Alaoui Smaili, co-founder and CEO of HPS, which works with many of Africa’s major financial institutions, discusses how the payment landscape is adapting to changing needs.

THE PAYTECH MAGAZINE: How has the payment ecosystem in Africa changed in recent years?

ABDESLAM ALAOUI SMAILI: Africa has been a leader in mobile money, and in the way it has attracted the underbanked population into the financial circle. But, at the same time, it remained an extremely cash-dependent society.

What is interesting is that the pandemic has really changed the situation and economies have been jumping noticeably faster into electronic payments. This has been reinforced by advice from the World Health Organisation, encouraging contactless mobile payments. The acceleration towards electronic payments has been really noticeable at a very large scale.

TPM: What has been the impact of this shift away from cash? Has this been at the expense of financial inclusion in Africa?

AAS: I think people are still left behind. What was achieved last year was done in an emergency, and most probably not in a very structured way; not at the whole continent level. Some countries have been more aggressive than others, or have been more exposed than others. So yes, the background was there, to be able to accelerate and the crisis has effectively

TPM: GhIPSS has been spearheading Ghana’s shift to a cash-lite society; Ghana’s president said Ghana would eliminate paper from most services and transactions this year. Are there particular trends in Ghana compared to the rest of Africa?

AAS: Ghana is a pioneer in many aspects of what it does, and today the Ghanaian model is being followed by other countries, both in terms of Ghana’s internal operations and what it offers to local people. But also the way that GhIPSS and the Ghanaian ecosystem has been able to interface with fintechs outside the country, which has allowed fintechs in Europe and fintechs in North America to use the services that GhIPSS is offering in Ghana. To be able to make an instant transfer from an account in the UK, or the US, down to a deep village in Ghana, and all in an instant way? This is really magic.

TPM: Fraud is a scourge on the Africa payments landscape, as elsewhere. How does HPS help combat it?

AAS: Fraud is one of the risks, and a pain that our customers and the industry

Emerging payment systems:

Africa has many challenges but also huge potential

has done with Absa, the South Africa-based financial services group, and the acquiring platform it provided for its ‘rest of Africa’ merchants?

AAS: We have been able, with Absa, to deploy a multi-country, multi-currency, multi-regulator platform, enabling Absa to offer a more agile and more modern acquiring platform to its merchants in eight different countries – Botswana, Kenya, Mauritius, Zambia, Tanzania, Ghana, Uganda and Seychelles.

Beside the swift, secure and uninterrupted high-quality service to merchants, they are now empowered with an improved 24-hours-a-day, seven-days-a-week, self-service portal covering the entire set of needed facilities, avoiding unnecessary waiting time on call centres. In short, this means less risk, less fraud.

It is a very interesting platform that Absa is now offering to its subsidiaries outside of South Africa.

TPM: How critical is standardised interoperability within the payments ecosystem in a digital world?

AAS: Today, we have various initiatives that are being deployed in different countries to enable international interoperability, addressing diverse needs. And we are addressing the remittance business that is today a large business in Africa with specific solutions for specific problems, and all this in one, diverse platform.

By a diverse platform, I mean we are able to interoperate with different actors, that are either competitors of HPS or partners of HPS: fintechs, banks, telcos and payment service providers. Because, in order to be successful, interoperability needs to go with the word diversity; diversity of actors, diversity of customers, and diversity of transactions, to ensure we have this critical mass that will make it viable.

players are suffering from. When you look at what is happening today, there are more and more unattended terminals, more and more independence given to the payee. Merchants are able to take payments on their mobiles, customers are able to pay on their mobiles; as we move into invisible payments, nobody knows really if they’ve paid or are paying. So the whole landscape is changing and so is the way that fraud needs to be addressed.

What we have done Innovation at HPS is enhance our PowerCARD-Fraud solution to be able to is killed either by the cost address fraud from a of it, or by the global point of view, not just from a channel perspective. The time it takes to get to market PowerCARD-Fraud solution is customer-centric, and means we can link usage between this form and that form of payment, so we can protect the consumer, and also our bank customers. TPM: In an environment of high-volume,

The mobile-first strategy is also low-value payments in Africa, how can important because we can empower the financial institutions stay ahead? consumer, and also the merchant, to be AAS: Any new platform has to be able to play a role in fighting fraud. futureproof, so any investment a bank makes needs to be done with a vision TPM: Can you talk about the work HPS of what will happen – and things are changing dramatically. At the same time, and especially in the African context, scalability is a real issue because we have a large population that could, in one jump, all be in one payments space.

And, for me, the third aspect, because of the complexity of the economies and the need not to be trapped into complex technologies, is the need for a single technology platform. That would be interesting because it would be able to deploy, to invent, to put to the market sophisticated payment solutions.

The industry is really changing in form, in its volume, in the type of attacks that are coming from outside. This means that a business has to be very agile. We need to have fast business model change, we need to have operations that can be changed from one day to another. As you can see, so many things have to be flexible. We talked before about time to market, but that was only for a product; the time to market is also about operations, and how we can deploy them internally.

So this agility in being able to run and absorb new business models, with all the associated cost involved, is extremely important. And that can only be achieved if the platform is truly digitally native, and not being patched in order to accept a new channel, for instance. HPS brings a new platform to market every five to six years, so it’s not a cosmetic change to a legacy platform.

TPM: Finally, how can HPS help large institutions innovate in a scalable manner?

AAS: I think what kills innovation is time. Quick wins are absolutely the path to follow. And quick wins need to be, in a lot of cases, in conjunction or interoperable with legacy platforms. Numberless cards, for instance, is a product that is desperately needed these days and it’s something we have launched for some of our customers in conjunction with their existing legacy platforms.

Another thing to bear in mind is that innovation in this payments space has to be mobile-first. So this is something that can be launched quickly, that really brings a lot of value to the customer, because it is frictionless.

All this needs to be accomplished with reasonable cost. Because here again, innovation is killed either by the cost of it, or by the time it takes to get to market.