By Kamran Hedjri
PXP Financial
Around the world, alternative payment methods (APMs) are opening up financial avenues for underbanked populations, and Africa is no exception. But while some African countries are surging ahead with APM adoption, for many parts of the continent, particularly in rural areas, these services are still not easily accessible. Can gaming level the playing field?
Across the African continent, it’s very much a tale of two extremes when it comes to how people make payments and their relationship with money. If we look at Africa as a whole, mobile money has become a dominant form of digital payment thanks to the continent’s high mobile phone penetration. Services like M-Pesa in Kenya and MTN Mobile Money in various West African countries are now widely used, allowing users to store, send, and receive money using mobile phones. Card payments, including debit and credit cards, are also significant, particularly in urban areas.
But if we isolate the two largest economies in Africa , South Africa and Nigeria, we see the extent of the disparity in payment trends (see bit.ly/3A2rO1U) . South Africa has the most developed financial services sector on the continent, with 80% of its citizens owning a bank account and 60% owning cards. Meanwhile, in Nigeria, more than half of the population is considered unbanked and card penetration is significantly lower.
Elsewhere, in Sub-Saharan Africa, researchers have found that approximately 90 percent of all payments and transactions are made via cash, and adoption rates for credit cards and debit cards are low, 3 percent and 18 percent, respectively. In this region, less than half of adults (49 percent) have a bank account.
While the adoption of APMs varies starkly across Africa, the same cannot be said of gaming.
Last year, the global online gaming market generated around 26.14 billion U.S. dollars in revenues (see bit.ly/48ehLU3) and approximately 1.1 billion online gamers worldwide (see bit.ly/3A5xTdS), and Africa is gaining momentum.
This is promising not only for gaming developers, but also for payment platforms looking to reach untapped and unbanked communities across the continent.
In recent years, Africa has enjoyed increased internet connectivity, higher smartphone adoption rates, and the introduction of high-bandwidth network connections like 5G, all of which have elevated the region's gaming market demand. While research suggests that the African gaming industry will surpass $2 billion this year (see bit.ly/3zTz7sN), the actual demand is likely to be much higher.
Gamers are a unique type of consumer: they are young, tech-savvy and quick to adopt new technologies, including alternative payments methods. Their willingness to embrace the latest innovations and avoid anything outdated has constantly pushed the gaming industry to stay at the cutting edge. Today, that includes integrating the right mix of payment methods to enhance the player experience and create a seamless payment journey. We know in developed countries gamers often link their debit and credit cards to gaming payments, while in areas where bank accounts and credit cards are less common, digital wallets or prepaid cards typically serve as primary payment methods.
In Africa, we can see that a young and tech-savvy audience is evidently present, and in the global gamer population, adoption of APMs is proven. This could potentially be the gateway to introducing APMs in a more consistent way across the continent. By following the lead of gamers in adopting APMs, the wider population across African countries can enhance financial inclusion and create a more accessible financial ecosystem for all.
Despite overall progress in promoting financial inclusion across the continent, there are significant gaps in access to accounts for women, as well as for poorer adults, less educated or rural adults (see bit.ly/3Nx6CnO). APMs are crucial in promoting financial inclusion by providing access to financial services for individuals and businesses that are typically underserved or excluded by traditional banking systems. Moreover, APMs often come with lower fees compared to conventional banking services, making them more affordable even for low-income individuals. They also do not require users to maintain a minimum balance, which can be a barrier to entry for traditional bank accounts.
Critical for many African communities, APMs cater to those without access to traditional banking by providing essential services like remittances, bill payments, and savings options. Some APMs also feature simplified Know Your Customer (KYC) processes, making it easier for individuals to open accounts. By broadening access to gaming through APMs, game developers can enter previously untapped African markets, unlocking substantial growth potential for the gaming industry. Making gaming more accessible via APMs can also help platforms cultivate stronger gaming communities, enhancing the overall gaming experience. This ripple effect could extend even further, introducing APMs to the broader community beyond gamers.
The growing gamer population means APM will grow alongside it, potentially expanding beyond the gaming community, which can only be a positive development for the broader market. More than 80 million unbanked adults in Sub-Saharan Africa receive payments for agricultural goods in cash. Consider the impact of digitizing those payments, and how it could motivate a share of unbanked adults to adopt formal accounts, leading to an increase in financial inclusion.
Gamers have long recognized the value of APMs. By initially spreading among gaming communities, these innovative APMs can establish a presence in Africa, ultimately benefiting underbanked communities the most. 
Kamran Hedjri is group CEO at PXP Financial, an end-to-end payment platform that provides a single unified payments platform to accept payments online, on mobile and at the point of sale. Powered by in-house acquiring, 120+ alternative payment methods and financial services, PXP processes over EUR 22.7 billion annually. To find out more about PXP, visit www.pxpfinancial.com. Contact Kamran Hedjri at www.linkedin.com/in/kamranhedjri/originalSubdomain=gi.
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