Payments in Africa’s red metal hotspot Zambia are morphing fast to cashless especially with the advent of the COVID19 pandemic. This follows the soaring appetite for electronic money as the central bank widened limits for plastic money in the pandemic period. According to the Bank of Zambia quarterly payment statistics, total retail payments for 1Q22 grew 44% to K117.1 billion year on year supported by 49.0% sprint in mobile money (MoMo) transactions to K50.4 billion, 19% growth in electronic funds transfer (ETF) and a 133% rally in point of sale (POS) spike to K24.3 billion.
The growth in quantum was also fueled by higher transaction volumes of 60% overall to 303,390,000 on retail payments decomposed into 64% uptick in MoMo to 277,092,000 and 15,329,000 accounting for 64% in POS growth volumes in 1Q22. Mobile money and point of sale for 1Q22 represented 64% of retail payments compared to 13% and 4.3% in 2017 and 2015 respectively.
This is the first time in the Southern African nations history that POS as a mode of payment was surpassing ATM transactions and is now the third most used mode of payment after ETF and MoMo. Zambian consumers continue to embrace cashless payment modes as digitization continues to accelerate as one of the autopsy effects of the pandemic.
The drastic shift in consumer preferred payments
For 1Q22 card data grew to 23.8 million transactions from 18.1 million with POS accounting for 64% from 51% as ATM withdrawals sagged to 36% from 49% in 1Q21. Overall the data reveals the Zambian consumers comfort with cashless transactions whose value has climbed 65% to K38.9 billion quarter on quarter. This nonetheless will ebb cash management costs for banks and will simultaneously offset declining ATM revenue growth, a postmortem of extermination of unwarranted fees initiatives by the central bank.
Quarterly (1Q22) data reveals total transaction value for the average card during the period has grown 38% to K11,800 with the average POS transaction at K796,000 up 86% as ATM at K14,758. The birth of mobile booths and agency banking such as Zanaco Express and FNB has seen the decline of ATM machines. The average card transaction amount rose 25% to K1,633 with average POS transaction widening 41% to K1,584 while ATM average transaction size climbed 15% to K1,722. This shift reveals growing trust for cashless transaction platforms.
Slow death of the cheque
The central bank payment statistics reveal further that cheque payments were the least preferred mode plummeting 5.0% to K2.1 billion while volumes year on year 4.0% to 300,000. The cheque option is phasing out steadily.
Changes to demographics and the COVID19 pandemic remains the key driver of the greater uptake of digital transactability products in Zambia. The Southern African nations younger population are embracing digital products.
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