More than 90% of the African population prefers to use hard cash for personal consumption expenditure (PCE) rather than conduct electronic payments.

This is according to Michael Miebach, president of MasterCard in the Middle East and Africa, who said this week that Africa presents huge growth potential for electronic payment systems. Moreover, according to research from MasterCard only 23% of adults in Africa have a formal banking account.

But Miebach has added that partnerships with government, regulators and industry players, together with open dialogue could help boost the number of those who are banked and who use electronic banking methods.

Miebach explained that the advantages of electronic payments are that they can be used globally.

Spiwe Chireka, programme manager for telecoms (Africa region) at the International Data Corporation (IDC), has told ITWeb Africa that it’s not just a lack of partnerships and open dialogue that are holding back the adoption of electronic payment systems in Africa.

“Electronic payments require vast banking infrastructure including Automatic Teller Machines (ATMs), Point of Sale (PoS) systems and variable channels of access to banking and payments such as cellphones and internet,” said Chireka.

“Unfortunately, this is not the case for Africa,” she said.

Chireka explained that there is a huge informal business sector in Africa and up until mobile payment systems such as M-Pesa there hadn’t been payment solutions tailored to this segment by the banks.

However, she said that mobile money has been geared towards a peer-to-peer rather than peer-to-business.

“Consumers are still forced to use cash to pay for goods and services when dealing with businesses or other services suppliers,” she added.

Chireka further blames financial institutions for the slow uptake of electronic payments in Africa.

“Opening and accessing a bank account is highly regulated in most countries banks require some kind of paperwork or verification processes that most individuals are unable to meet. This means no bank account and consequently no access to electronic payment options,” she said.

Chireka concludes that the reason for the slow uptake of electronic payment systems in Africa could simply be a case of old habits dying hard.

“Banks and other institutions promoting electronic payments need to provide compelling reasons and encouragement to consumers and businesses as to get them using the services,” she explained.

“Mobile money providers sold their service through easy to setup and access, affordable and secure messages. Other electronic payment solutions need to do this,” concluded Chireka.