The Rise of Virtual Cards in Africa: Key Insights from the GSMA Mobile Money Report 2023

The “State of the Industry Report on Mobile Money 2023” by GSMA highlights the growing adoption of virtual cards by African mobile operators such as Safaricom’s M-Pesa, MTN’s MoMo, and major international card networks like Visa and Mastercard.

Key Highlights

• Safaricom M-Pesa & Visa Partnership: In June 2022, Safaricom and Visa launched M-Pesa GlobalPay, a virtual Visa card enabling M-Pesa users to shop internationally on platforms like Amazon and subscribe to services such as Netflix. The card has a transaction fee of 3.5% and is available in Kenya, with plans for expansion to Tanzania, Ghana, Mozambique, Congo, and South Africa.

• MTN MoMo & Mastercard Collaboration: MTN’s virtual card service, launched in Zambia, is set to expand to countries like Ghana and Uganda, allowing users to make online purchases without a physical card.

• Virtual Card Advantages: Virtual cards save mailing costs, offer easy applications, and protect users from fraud by using a pre-set spending limit. These cards are increasingly popular for international shopping, hotel bookings, and securing payments in potentially fraudulent transactions.

• Challenges of Virtual Cards: Despite their benefits, virtual cards come with high transaction fees (e.g., 3.5% for M-Pesa GlobalPay), and are susceptible to fraud, as seen with Union54’s service in Nigeria. Additionally, the lack of robust fraud management systems has been a major issue.

• Boosting E-commerce in Africa: Virtual cards are expected to facilitate cross-border payments, which is crucial for the growth of African e-commerce platforms like Kilimall. By enabling secure international payments, virtual cards could stimulate the middle class to engage more with online shopping, aiding the development of local businesses and cross-border logistics.