NAIROBI, Kenya, Feb 26 – Kenyan banks have reached a two million Visa card milestone up from one million three years ago.
The target which also celebrates a $3.3 billion transaction volume on Visa cards has seen Kenyan banks bring more people into the formal financial services system despite the fact that mobile service providers also provide money transfer services.
General Manager Visa Sub-Saharan Africa Charles Niehaus on Thursday said Kenya stood to significantly boost her economy by increasing the use of card and electronic payment systems. He said it was important for the country to promote safe and responsible banking habits.
“We have done a lot of global research on how electronic payments boost the economy and actually help grow the Gross Domestic (GDP) product. Some of the research we’ve seen is that a 10 percent increase in electronic payments grows a GDP of one percent. Most of the cost of cash in an economy is very high; sometimes rates between five and seven percent of the cost of actually printing money, security and transportation,” he said.
Mr Niehaus who also said Kenya continued facing a challenge of bringing un-banked individuals into the formal banking systems added that Visa was looking into ways for getting into mobile money transfer services to merge informal and formal payments systems.
“We are looking at what is that money transfer solution, how it works and how inter-operable it is. Visa has just come out globally with a money transfer solution as well and we are looking at how do we link this to the mobile plat form; how do we open up cross border remittance corridors which domestic schemes are absolutely limited to,” he said.
He also explained that cash dependent countries tended to have low economic growth rates because the currency held outside the system in the informal economy deprived banks of funds needed for credit expansion and monetary growth.
“Every currency unit that circulates as hard cash is a missed opportunity to invest, develop and grow an economy. Two million Visa cards in Kenya is evidence that progress is being made in bringing more Kenyan shillings into the Kenyan banking system. The more people join the banking system the more stable the economy becomes,” he said.
Mr Niehaus who also maintained that Kenya remained the largest market by number of cards issued outside of South Africa in Sub Saharan Africa also said that the entry of banks to mobile money transfer services did not pose any challenge.
“We don’t see it as a danger rather as how do we align with them. Africa has got 290 million mobile phones; it has more mobile phones than North America and more people have mobile phones than have bank accounts so you are seeing an entry of non traditional players into the banking space. You’re seeing mobile network operators coming in, you’re seeing independent organisations coming in so we don’t necessarily view it as a level of competition,” he said.
Although he admitted that the issue of credit card fraud continued being a threat to the Visa card business Mr Niehaus maintained that electronic payments promoted transparency and accountability and that it further boosted the economy.
“I believe that a key reason for growth is the convenience and safety of cards. It convinces most people to use their cards for everyday spending, whether to pay for shopping or at point of sale,” he explained.
He added that tourism made a significant contribution to Kenya’s economy and that in order for Kenya to optimise benefits realised from tourism, effective payment infrastructure needed to be put in place and make it easy for tourists to book and pay for their experiences.
“Attracting tourist spending depends on international acceptance infrastructure being in place. This can be achieved by brining merchants into the network by means of low cost terminal technology,” he said.