Paypal Makes Headway in Africa

Paypal makes inroads on a continent where cash is still king.

PayPal hasn’t had much success in Africa, a continent that believed cash is the only medium of payment and where e-commerce is only starting to flourish.

Yet, with mobile money witnessing an explosion in Africa, PayPal saw a route to increase its presence. The company intends to deploy its money-transfer service Xoom in Africa in a big way, with the winning card being to allow customers in Western countries to make direct transfers to mobile wallets.

Initially, the service—designed to “focus on the underbanked segment”—will roll out in 12 countries before being scaled up across the continent, with the goal of one billion registered accounts. 

Still, the dynamics in the continent pose challenges, reckons Tracy Kivunyu, senior research analyst at Tellimer. Even though Africa is a huge market for international remittances and PayPal has the necessary experience, she says, “telcos dominate the mobile money space.” 

Kivunyu adds that internet access is limited, and a majority of the population still use regular phones as opposed to smartphones. PayPal’s requirement that users to download Xoom’s mobile app instead of offering the unstructured supplementary service data (USSD) code could limit penetration.