OPED: Why Can’t We Have a Unified Payment Aggregation Service

Imagine there was one app that supports all different payment types and one does not need to have a different app for each payment method.

Let’s face it, we’ve all found ourselves in a situation where we have to pay for goods and services, only to realize that our choice of payment is not supported.

While the service providers are doing their best to support as many options as possible, it’s an uphill task considering that there are always new entrants entering the industry.

For the purpose of execution, imagine if you walked into Carrefour Uganda and all you have to do is dial a specific code through which you can pay using any method, whether Mobile Money, Card, EFT, Fintech app, Bitcoin, etc. Alternatively, imagine there is one app that supports all different payment types, so one does not need to have a different app for each payment method.

While it’s technically possible to have one payment aggregator, there are several practical reasons why it’s not currently feasible or desirable to have a single entity that aggregates all payments. What is standing in the way?

The first limitation when it comes to a unified aggeration service is the unique technical requirements and regulatory frameworks for each option. There are many different types of payments, such as credit card payments, bank transfers, digital wallets, and more. Creating a single payments aggregator that can handle all of these different payment types would be extremely complex and would require significant resources.

Secondly, having a single payments aggregator would create a monopoly in the payments industry. This would give the aggregator significant market power, potentially leading to higher fees and reduced innovation. It could also pose a risk to the security and privacy of users’ financial information, as a single entity would be responsible for handling a vast amount of sensitive data.

Also, different regions and countries often have their own unique payment systems and regulations. This makes it challenging to create a single payments aggregator that can effectively serve users across the globe.

Finally, the market for payment services is highly competitive, with many companies offering different solutions. This means that it can be difficult for a single aggregator to establish a dominant position and gain widespread adoption. This allows for greater competition and innovation in the payments industry, while also ensuring that users have a range of options for processing their payments.

What direction should Innovators in Africa take?

Any payment aggregator that wants to be positioned as a leader should think of innovations that involve mobile money. Due to the high levels of mobile phone penetration and the limited access to traditional banking services in many areas, mobile money has the highest penetration.

According to a report by the GSMA, a global mobile network operator trade body, there were 515 million unique mobile subscribers in sub-Saharan Africa as of the end of 2021, with smartphone adoption reaching 50% of total connections. The report also projects that smartphone adoption in the region will continue to grow, reaching 65% by 2025. This means that any innovation direction in Africa needs to be mobile-based, catering to both feature phones (USSD) and smartphones.