By Kamran Hedjri, Group CEO at PXP Financial
In numerous regions of Africa, traditional banking services remain difficult to access, especially in rural areas. Alternative Payment Methods (APMs) offer accessible transaction channels, opening financial opportunities in underbanked communities. With a thriving gaming community on the continent, could gaming be the catalyst for broader APM adoption?
Last year, the global online gaming market generated around 26.14 billion U.S. dollars in revenues. Although growth has stabilized, online gaming remains highly popular, with approximately 1.1 billion online gamers worldwide. China, South Korea, and Japan lead in terms of online gaming reach, but Africa is also gaining momentum. This trend is promising for developers and could benefit unbanked communities across the continent.
Gamers are a unique type of consumer; they are tech-savvy and quick to adopt new technologies, including alternative payments methods. Their eagerness to embrace the latest innovations and avoid anything outdated pushes the gaming industry to stay at the cutting edge.
In countries like Singapore, gamers habitually link their debit and credit cards to gaming payments. In Indonesia, where bank accounts and credit cards are less prevalent, digital wallets or prepaid cards often serve as primary payment methods.
Payments are integral to the evolution of gaming. But could the opposite be true in Africa?
The gaming landscape in Africa
Africa is a vibrant and diverse continent with gaming communities in countries like Nigeria, South Africa, Morocco, and Egypt. It has a young population that primarily engages in mobile gaming, which shapes their gaming experiences and payment methods.
Population growth and the adoption of mobile devices are fueling the gaming industry’s expansion, projected to be worth USD 2.14 billion in 2024, and expected to reach USD 3.72 billion by 2029.
The surge in mobile gaming across Africa is supported by increasing internet connectivity, higher smartphone adoption rates, and the introduction of high-bandwidth network connections like 5G, all of which have elevated the region’s gaming market demand.
The audience is evidently present, and gamers’ adoption of alternative payment methods (APMs) is proven. Could gaming then be the gateway to introducing APMs to the rest of the continent?
Gamers are typically early adopters of APMs, and with the growing gamer population, APM usage is likely to rise. This trend indicates that APM adoption could soon expand beyond the gaming sector, a positive development for the broader market.
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Wider APM adoption = better financial inclusion
By broadening access to gaming through APMs, game developers and publishers can enter previously untapped African markets, unlocking substantial growth potential for the gaming industry. Making gaming more accessible via APMs can also help platforms cultivate stronger gaming communities in underserved regions, enhancing the overall gaming experience. This ripple effect could extend even further, introducing APMs to the broader community beyond gamers.
In Africa, cash transactions still account for approximately 90% of all transactions. According to the Global Findex Database (World Bank), only 3% of the population in sub-Saharan Africa has access to a credit card, while mobile phones have rapidly proliferated, achieving a 75% penetration rate. This makes alternative payment methods an ideal fit for the region’s needs.
APMs are crucial in promoting financial inclusion by providing access to financial services for individuals and businesses that are typically underserved or excluded by traditional banking systems.
Moreover, APMs often come with lower fees compared to conventional banking services, making them more affordable even for low-income individuals. They also do not require users to maintain a minimum balance, which can be a barrier to entry for traditional bank accounts.
Critical for many African communities, APMs cater to those without access to traditional banking by providing essential services like remittances, bill payments, and savings options. Some APMs also feature simplified Know Your Customer (KYC) processes, making it easier for individuals to open accounts without extensive documentation.
By leveraging technology and innovative solutions, APMs bridge the gap for the unbanked and underbanked, empower small businesses, and stimulate economic growth in underserved communities. Following the lead of gamers in adopting APMs means African countries can stimulate economic growth, enhance financial inclusion, and create a more accessible financial ecosystem for all.
While research suggests that the African gaming industry will surpass $2 billion in 2024, the actual demand is likely to be much higher. By understanding and serving gamers in the region, developers can do more than meet the demand for engaging and immersive social experiences that mobile games offer.
Gamers have long recognized the value of APMs. By collaborating with payment experts, the gaming industry can act as a bridge, connecting innovative APMs with underbanked African communities who stand to gain the most.
About PXP Financial
The end-to-end payment platform: PXP Financial provides a single unified payments platform to accept payments online, on mobile and at the point of sale. Powered by in-house acquiring, 120+ alternative payment methods & financial services, PXP processes over EUR 22.7 billion annually through our unified gateway. Whatever your business needs today or tomorrow, PXP Financial’s innovative payment platform will support your business growth with all the payment services you will ever need from one source, wherever your business takes you.
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