The digitization of national economies to become more global has accelerated the streamlining of business processes even in the corporate space due to the obvious benefits of reduced clearing times and enhanced cash-flow visibility.
As a result of this, South Africa has seen a dramatic drop in the use of cheques – a drop of 80 percent in 2012 to just 1 percent today.
One of the country’s banks reported 2/3 of its transactions were made through host-to-host platforms in 2019 alone.
In Nigeria, cheque-clearing times have been cut from 21 days to just 24 hours while digital-only banks continue to see wide adoption in both Nigeria and other parts of Africa.
Absa Group, one of the largest Pan-African banks, is expected to become the first bank to phase out cheques as means of payment by the end of 2020.
Some of the factors that have contributed to this shift in such a short period of time include:
Accelerating domestic digital adoption – The Sub-Saharan region alone accounts for over 45% of mobile money payments in the world with transactions valued at over $450 billion – 3 times that of South Asia, the second-biggest mobile money region
Growing complex business networks – Trading links that once followed ex-colonial patterns are now branching out. The largest African trading partners are no longer Britain, France or Belgium, but China, India, and other Southeast Asian nations
Multi-lateral collaboration and Partnerships – Ongoing commitment about financial institutions to work together by forming deep partnerships with regional banks and regulatory institutions is helping solve the political, regulatory, and forex landscape challenges among players in the space
The transition from traditional payment and monetary systems to modern digital alternatives is accelerating due to the safety, convenience, and efficiency that comes with it. While mobile digital payments have no doubt dominated in this space, cryptocurrency payments are likewise getting adopted, especially in Africa.