The creation of a truly cashless society depends on the liquidity and cost of using of e-money being on a par with cash, as well as finding a way to service last mile payments. This can be achieved through building a third tier in the payment system comprised of existing small merchants, according to Vahid Monadjem, chief executive officer (CEO) of Nomanini.

Citing research by Frost & Sullivan that the value of mobile money transactions in Sub-Saharan Africa reached US$ 656 million in 2014, and could more than double to US$ 1.3 billion in the next four years, Monadjem says mobile money has "taken off" in Africa, and has succeeded in making payment transactions more affordable and accessible.

However, this has been achieved largely through an agency-based model, which still does not allow for costs to be reduced to the point of making cashless transactions viable for single dollar transactions - which he refers to as "last mile" transactions.

The current agency model requires relatively high value transactions to be viable for the agent - the average M-PESA transaction being US$20, Monadjem says, which is very high compared to average earnings in developing markets such as Africa.

Like this, he says "last mile" transactions are still excluded; although this can be changed through the introduction of third tier within the payments sector, leveraging the network of existing small merchants.

"It's time to extend the gains of the agency model to the next level: to single dollar transactions with general retail merchants on every street corner," Monadjem says.

"There is a need for a third tier in the payments system if the last mile of payments is to be covered. The first tier is of course bank branches and ATMs, the second tier is mobile money agents and the third tier is merchant payments," he says.

"We need to make single dollar transactions a cost-effective reality, which it cannot be under the current system, as it is impossible for single dollar transactions to cover the costs of the first and second tier models."

According to Monadjem, equipping existing small merchants across the continent with cashless point of sale (PoS) devices - such as Nomanini's - makes single dollar transactions a viable reality, as the merchants will not rely on transaction fees as a sole source of income.

"This is based on simple economics. Whereas 100 per cent of an agent's income comes from payments, merchants sell all sorts of other items, so processing of transactions provides an additional income or a complementary income for the rest of their business," Monadjem says.

"With lower overheads - the shop is already built, the staff are already employed - costs come down, and with them so do transaction values. Now single dollar payments are a possibility, simply by utilising a massive pre-existing network."

Monadjem says the goal of creating a fully cashless society necessitates solutions which can address the low-income, "last mile", section of the payments market - and says his merchant network solution is a model with huge potential.

"To create a truly cashless society will require that the liquidity and cost of using of e-money to be on a par with cash, for those at the bottom of the pyramid as well as at the top. That is the story of single dollar payments, where currently cash has a better value proposition for daily payments," he says.

"By utilising the huge existing merchant network to make single dollar payments more accessible and affordable to the bottom of the pyramid, a third tier is possible. This is what our service offering enables."

Furthermore, once the "nano transaction" space has been catered to, Monadjem says a number of ancillary services will also be opened up to last mile customers, such as credit scoring, insurance, and inventory management for merchants; improving overall financial inclusion.