COVID-19: Why going cashless could help contain the spread of the virus

As the COVID-19 pandemic continues to impact economies and societies across the globe, the adoption of cashless transactions has seen a significant uptick in Africa. The move towards digital financial services has been accelerated by the pandemic, prompting discussions on whether this shift could be one of the positive outcomes to emerge from the crisis. Lucy Mbabazi, AVP Push Payments and Acquiring at Ecobank International, shared insights on the benefits of going cashless and the challenges faced in the transition. In a recent interview with CNBC Africa, Mbabazi highlighted key points surrounding the adoption of cashless solutions in Africa.The Republic of Rwanda stands out as a leading example of embracing digital transformation. The government has been proactive in promoting digital payment systems and encouraging the use of cashless solutions. In 2020, Rwanda aimed to become an ICT-driven country, with a vision for widespread access to digital financial services. The onset of the COVID-19 pandemic further underscored the importance of reducing cash transactions to limit physical contact and the potential spread of the virus. Restrictions on cash withdrawals during the crisis highlighted the advantages of digital transactions, which remained unaffected by such limitations. The transition to cashless payments has not been without challenges, particularly for individuals in the informal sector who heavily rely on cash transactions. Despite these hurdles, the acceptance and promotion of digital payment methods have laid a foundation for future crises, emphasizing the importance of personal safety and security in financial transactions. The shift towards cashless transactions is gaining momentum in Rwanda and other African countries, signaling a broader transition in the financial landscape.Access to devices remains a critical factor in the adoption of cashless transactions, especially among individuals in the informal sector who may not have smartphones or computers. Mbabazi addressed this concern by highlighting that mobile phones, even feature phones, can serve as financial tools for the majority of the population in Africa. With an average mobile penetration rate of 40-80% across the continent, mobile payment solutions have become increasingly accessible. The prevalence of mobile devices has facilitated the transition from traditional card-based payments to mobile transactions, which are well-suited for sending and receiving money over distances. The ubiquity of mobile phones in Africa has transformed the digital financial ecosystem, making digital transactions more inclusive and user-friendly.Cashless transactions extend beyond mobile money and encompass a wide range of digital payment options. Mbabazi emphasized the versatility of digital transactions, noting that individuals can now pay bills, purchase goods, transfer funds, and conduct various financial transactions digitally. The goal is to create a digital economy where businesses and consumers alike embrace digital payment methods over cash. By offering customers the option to pay digitally, businesses can enhance convenience and efficiency in financial transactions. The trust in digital financial services, including mobile money and banking applications, has increased, prompting more people to shift away from cash transactions. The convenience, security, and accessibility of digital payments have been underscored by the COVID-19 crisis, accelerating the transition towards cashless transactions across diverse sectors including healthcare, education, and social services.Overall, the rise of cashless transactions in Africa amidst the COVID-19 pandemic reflects a broader trend towards digital transformation in the financial industry. While challenges remain, such as ensuring universal access to digital tools and promoting trust in digital financial services, the shift towards cashless payments offers numerous benefits. From increased personal safety and security to enhanced convenience and efficiency, digital transactions are reshaping the financial landscape in Africa. As the continent continues to embrace digital innovation, the legacy of COVID-19 may be remembered as a catalyst for driving financial inclusion and digital empowerment across Africa.