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Hear the Drums Echoing Tonight? The Relentless March of Online Money Transfers in Africa

 8 min read / 

Imagine a continent larger than the US, China, India and most of Europe combined. It contains over 1.26 billion people – around 16% of the world’s total population. You guessed it: Africa.

But despite its huge area (around 30 billion square kilometres), the average population density per kilometre is 42 people, with over 60% living outside of the towns and cities.

Naturally, this presents significant problems for people attempting to live their lives and run successful businesses. Managing finances, and in particular gaining easy access to money, is one of the biggest hurdles to success, especially for those living in remote areas. In February 2017, estimated that 80% of Africans are without a bank account with 90% of retail transactions being made using cash.

However, the same is not true of mobile phone adoption. Around 90% of Africans own a mobile phone, and although smartphone use is currently low, the introduction of more affordable models is driving those rate up rapidly. Smartphone ownership doubled in two years. This significant potential in the online money transfer space has not gone unignored.

Mobile Phone Use for Fintech Solutions

Since so many people, even those in extremely remote areas, are now reliant on their handsets, it’s clear that the continent is ripe for introducing mobile solutions for managing money. While many people either have no access to traditional banking services, or prefer to trust the proverbial ‘cash in the mattress’ approach, the way in which mobile phones have become essential to their lives makes it more likely that people will turn to them for managing their money.

Who Could Benefit Most from Cashless Transactions?

Financial transactions, such as money transfer services, are of great importance. As well as the day-to-day activities such as buying and selling, people working overseas frequently make online remittances to support their relatives at home, contributing to living expenses, health care, and education fees. In 2014, this amounted to $33bn, reaching 120 million families.

A whole host of people make use of money transfer services to send money home to their loved ones, including skilled expats, low-skilled workers, migrants, and refugees. There are several ways to make such transfers, but traditionally fees have been significantly higher than new mobile methods.

Standard money transfers


If you have access to banking services, a straightforward bank transfer ensures funds are deposited directly into the recipient’s bank account, often within a few hours, but can sometimes take as long as several days. Banks charge a fee for making international deposits, which is often scaled, depending on how much money you are transferring.

Money Transfer Operators

You can also use money transfer operators to send money to you family without relying on traditional banks. Historically, transfer operators used a network of agencies, which were often available in more rural areas where banks did not locate their branches. These are now often offered locally and online. Some offer a tracking service, so you can see when the funds have reached the recipient. Most also operate transaction limits, such as a maximum amount that can be sent in a given period, to combat money laundering or other illegal money activities.

98% of Africans working in Western Europe currently use money transfer operators to pay families, although this is expected to change as more people begin to send money on mobile phones.

Some of the main money transfer operators include RIA (the third largest money transfer agent), Western Union (providing acces to several key countries including Kenya, Zimbabwe, and Tanzania; however, they don’t offer a universal service across all locations), and MoneyGram (offering a range of ways to send money, including agencies, online money transfer services, and using a mobile money transfer app).

Foreign Exchange Brokers

As well as offering foreign exchange services, some forex companies also allow you to send money via international transfers. Generally speaking, they don’t offer a cash service or allow transfers in the same currency (e.g. deposit and withdrawal in dollars), but they are an option if you have the ability to do transactions online.

Like money agents, you have to set up an account, but transaction fees often undercut those of banks. Another advantage is that exchange rates are usually set using live data. Forex companies offering such services include Travelex, Moneycorp, and TorFX.

Online Payment Systems

Some companies offer an exclusively online service for making remittances.


Paypal is perhaps the best known online money service, although other players are now becoming more established. Paypal operates in over 200 countries worldwide, including many countries where other services are limited such as the DR Congo.

It offers personal and business accounts, the main difference being that personal accounts have a limit on the total amount that can be handled via the account. Fees are based on a percentage of the transaction. Paypal operates online, but also has an app that can be synced across your smart devices.


Skrill provides an ‘instant’ money transfer service to anyone with a current email address or phone number. It operates in over 200 countries across the world, including Kenya, Ghana and Burkina Faso. Skrill also deals in 40 different currencies. The recipient can draw cash from a bank, agent or mobile wallet.

Direct Pay

Transactions using Direct Pay can be done online, by email or in person. It accepts all major credit cards, digital wallets, and mobile money solutions.

Digital Wallets

Digital wallets are a fairly new innovation and used by relatively few people in Africa. They require a smartphone which are not yet widely available across the continent.

A digital wallet works by storing debit, credit and store card details within the app, enabling it to be used as a kind of ‘virtual’ card. Rather than carrying round a wallet full of plastic, everything is conveniently and securely kept within the app.

Naturally, security is a major feature of these apps, with banking-level features coming as standard to ensure customer peace of mind.

Digital wallet providers include Apple Pay, Google Wallet, and Paytoo (most of which can’t be accessed in Africa).

The Hawala System

One of the more unusual money transfer options is the Hawala system. This ancient practice operates mainly in the Horn of Africa and the North, as well as the Middle East and the Indian sub-continent.

Hawala is an informal system which works via an intricate network of agents (Hawaldars), bypassing banks and other established financial institutions. With this method, no actual money exchanges hands, whether that be literally or virtually.

Hawaldars are usually involved in other businesses, so they have a ready supply of liquid cash to enable transactions. To send a remittence using Hawala, you contact a Hawaldar, who is often a family member or trusted friend, and request an amount to be paid to your relative. You’ll be given a password for your recipient to use when collecting the funds from a local Hawaldar. The Hawaldars take a small commission, and have their own means of settling the debts between themselves.

The Hawala system is trusted in many communities. Agents are generally known to the families, transactions are fast and reliable, and the commission is very low. Some users also like the privacy – no formal records are kept, making the transactions untraceable.

However, this lack of accountability has resulted in adverse publicity for the Hawala system in an age where global terrorism and illegal money laundering are major issues, and some countries are now attempting to bring in better accountability by requiring ID and more formal records of transactions to be kept.

Transaction Security

Of course, where money is involved, security must be a very high priority. At its simplest, security can be ensured by the use of a password communicated from the sender to the receiver; however, online services require a much more sophisticated security system to ensure that accounts can’t be hacked.

Common security features include: Secure Sockets Layer (SSL), encryption, Two Factor Authentication (TFA), and security notifications. Additionally, financial services companies may be registered with a regulatory authority such as the the Financial Conduct Authority, or use an established electronic payment provider such as Euronet.

What to Consider When Making International Money Transfers

Naturally, no one system provides a perfect solution for everybody. So when you need to make international money transfers, you must consider a number of factors. These include: transferring between currencies or using the same one, exchange rate, amount of the transaction, nature of the transaction, speed of transaction, which countries are involved, origin of the payment, cost, and security.

Ultimately, you must consider which aspects are the most important ones for your individual circumstances. For example, you may be willing to sacrifice an element of trust to gain a faster or cheaper service.

However, it’s essential that you should make every effort to ensure your chosen provider is reputable and trustworthy before parting with your heard-earned money, especially in the case of cash transactions.

Because mobile apps are a relatively new method of transferring funds, you may feel reluctant to trust in them. You may worry that your account can be hacked, or that your money may get lost somewhere in cyberspace. However, mobile apps (especially those from long-established companies), can contain all the same levels of security required for online banking, making them a safe and convenient choice.


Online transactions offer an affordable and reliable way for money to be moved around the world. However, navigating your way through the intricacies of African fintech systems can seem like something of a minefield. Be sure to keep your wits about you!

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