I think by now we all have heard about mobile payment technology like CashApp. It is a mobile payment technology that lets you transfer money to anybody with an account for free, makes it possible for you to pay with your phone at a register through Apple pay or Samsung Pay. The technology can be used without the need for a bank account or even a financial institution, except for the proprietor of the app. This is something unthinkable for people that grew up in the Western Union era where the only way to get cash was a tedious and highly analog process, it feels so long ago. I started using mobile pay technology when I stopped taking a wallet with me everywhere. I frequented restaurants at lunchtime and was notorious for forgetting my wallet, so my coworker always had to front me some cash. It was not some diabolical ploy to get him to pay for my lunch, I just didn’t want to wear it in my back pocket while sitting at the desk all day.
I started tinkering with Apple pay and realized what a revolution it is and I turned my coworkers on to it and suddenly it did not matter if anybody had a wallet with them anymore because we would just send Apple cash to each other left and right. I love that technology, it's safe, fast, reliable, and best of all free! The only reason it is not more commonly used, even though this type of technology has millions of users in the US alone, is that many feel it is bothersome to set up and because many don’t trust to give their bank information to anyone but their Jobs HR department. This is a misguided way of thinking because if you use your banks' mobile app you already expose yourself to everything you are afraid of.
How often do you say or hear “I don’t carry cash” from? I hardly carry cash and can confidently say that I hardly ever pay with cash unless I drive through a toll gate. This is not because I don’t want to use cash, but because I don’t need to. Mobile payment technology is so versatile and can be used by anybody for nearly everything. You don’t need a bank account because you can store money in your digital wallet and spend it at your leisure without the risk of paying a fee or having the money expire. Mobile payment technology is a great way to give money to grandkids, pay back a debt to a friend, split the lunch bill at work if the waiter forgot to ask, or even buy drugs! This technology makes using money more convenient than ever.
The impact of this technology is mostly felt in the business world. Specifically small business, contractors, businesses with one employee or very small operation that does business on a case by case bases like a one-employee landscaper company that works out of a truck, a freelance tax advisor or accountant, a farmer selling her produce at the farmers market, a tutor, and the list goes on. These types of jobs are numerous in a free market society like the US, even though China is using this technology more than anybody partly due to its enormous population. But this technology is also a staple of countries of developing economies like in many countries in Africa.
Africa
Africa’s 54 countries have a combined population of 1.2 billion from which around 200 million subscribe to a mobile money service that uses mobile payment technology, as a contrast the US has about 50 million users of this technology. 80% of Africans currently use a smartphone and the number is expected to rise. Many African countries increasingly rely on mobile payment technology and have used it for over a decade! Like M-Pesa, a mobile payment system that started in Kenya in 2007 and now has over 30 million users in 10 countries. One of the leading mobile payment providers in Africa DPO said earlier last year that there are hundreds of millions of consumers in Africa that have not touched a physical currency in over a year, let alone use one to pay! The company is saying that an e-commerce revolution is happening in Africa and the world is not noticing it. Mobile money accounts in many regions in Africa have surpassed traditional Bank accounts. This is partly due to a limited number of regional banks and access to financial services for the average citizen. Furthermore, large parts of the population of the continent have yet to come online! The opportunities for Fintech and other domains are boundless in my opinion.
Enter, Jack Dorsey and Square. If small businesses are the backbone of America then companies like Square are the vertebrae. Like Square, a financial services company, Merchant services aggregator, and mobile payment company. If you ever bought food from a food truck, chances are you paid using Square technology. These little white tiles attached to an iPad makes it possible to slide your card. That’s Square. Find out more about Square from my article here.
But Square is much more than that, CEO Jack Dorsey, also co-founder and CEO of Twitter is a programmer by trade and is an overall outside-the-box thinker. Dorsey announced last year he will be moving to Africa for a few months in 2020. He caught a lot of flak for suggesting moving away so far from his companies, which are both headquartered in the United States, the move was likely hindered by the Covid-19 pandemic. Elliot management the activist hedge fund that owns large parts of Twitter wanted to oust him as CEO because they are concerned about his workload for both companies, he succeeded in fighting it and remains at the helm.
I assume Dorsey wanted to move to Africa to get some insight into the financial service industry and feel out the regulatory environment. The continent of Africa is a literal goldmine for financial services companies, especially in mobile payments. Dorsey didn’t say why he wanted to move to Africa, to many it seemed a little bit like a joke, I did not hear any reporters linking Africa’s emergence in the Fintech world and Dorsey’s interest in the country. He is more often discussed in conversations about Twitter even though Squares’ market cap is DOUBLE that of Twitters’, around $106 Billion, and $50 billion respectively. I think if he follows through with his plans and establishes an understanding of how Square can make an impact in Africa it will be bigger than anyone is currently expecting.
Thanks,
The Punkrock Capitalist
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