Electronic payment systems use integrated hardware and software that allow for the payment goods and services by electronic means rather than by the use of cash or paper checks. These systems include payment cards such as credit cards, debit cards, smartcards, and stored value cards; electronic fund transfers; electronic checks; electronic cash systems such as PayPal and Bitcoins; digital wallets such as Google wallet, Yahoo! wallet, and Microsoft account; and mobile phones such as M-Pesa and Apply Pay. In addition to being convenient, electronic payment systems are essential for stimulating economic growth; however, in contrast with the United States where there are a variety of electronic payment options, most African economies are cash-based. In Africa, conducting electronic financial transactions requires a great deal of paperwork, which can be costly and inefficient. According to a June 2012 Gallup, Inc., survey of 11 countries in Sub‑Saharan Africa, approximately 80 percent of adults make bill payments or remittances with cash.[1] An August 2014 World Bank report, found that due to the lack of digital-payment penetration in Africa, “governments, consumers, and financial providers in Sub-Saharan Africa are still bearing the high cost of cash payments—costs associated with manual acceptance, record keeping, counting, storage, security, and transportation.”[2]

With appropriate policies and regulatory frameworks African countries can successfully implement sustainable electronic payment systems. In addition to increased economic growth for the continent, these systems can decrease the cost of financial transactions; reduce the risk, including theft and currency counterfeit, associated with cash-based transactions; increase the speed of payments by reducing delays of effecting transactions; and increase financial inclusion by providing access to financial services and products at affordable costs to the poor and less privileged, as well as small businesses. But despite these benefits, the implementation and use of electronic payment systems in Africa remain low, as the countries must overcome a number of challenges. Specifically, African countries lack the appropriate regulatory framework; the physical infrastructure required to process electronic payments; consumer education to increase confidence, competence, and adoption; consumer protection against fraudulent, misleading, and unfair commercial practices; and the interoperability of bank and nonbank financial service providers to allow electronic payments to be made across several stakeholders, including individuals, employers, banks, merchants, and governments.[3]

Increasing the adoption and use of electronic payment systems in Africa will greatly benefit the continent; however, these systems will face a high risk of security breaches through cyber­­ attacks. Electronic payment systems depend on reliable and secure information and communication technology (ICT) networks and Internet infrastructure to process and transfer payments. Unfortunately, Africa’s ICT networks and Internet infrastructure are poorly protected against cyber attacks and fraud, and the continent is fast becoming a safe harbor for launching cyber attacks.[4]  Recent Microsoft studies have found that Africa has the highest rate of malware-infected computer systems compared to any other region in the world,[5] and it is estimated that about 80 percent of personal computers on the continent are infected with viruses and other malicious software.[6] Further, African countries rank among the highest in the world in cybercrime activities with at least 4 African countries—Cameroun, Ghana, Nigeria, and South Africa—ranking in the top 10.[7]

Over the last few years, Africa’s financial institutions have experienced several cybercrimes. A survey by Deloitte estimated that 60 percent of banks in East Africa are susceptible to security threats because of low information technology budgets; [8] for example, Kenya’s Central Bank estimates that its local banks throughout the country lose $2.8 million to fraud annually. In South Africa, hackers stole $6.7 million in January 2012 from Postbank over the span of 3 days.[9] Further, a 2013 study by the International Data Group estimates that each year cybercrimes cost South Africa $573 million, Nigeria $200 million, and Kenya $36 million.[10]

In summary, in order to shift from cash-based payment systems, African countries will need to implement robust and effective cybersecurity measures on their ICT networks and Internet infrastructures that will in turn support secure and reliable electronic payment systems. By adopting and implementing appropriate policies and regulatory framework, African countries will be better able to address the challenges associated with electronic payment systems and ensure the implementation of appropriate cybersecurity measures to protect any adopted systems from security breaches.


[1]  Johanna Godoy, Bob Tortora, Jan Sonnenschein, Jake Kendall, Payments and Money Transfer Behavior of Sub-Saharan Africans, June 2012, at http://www.gallup.com/poll/155132/Payments-Money-Transfer-Behavior-Sub-Saharan-Africans.aspx. Kendall, J., R. Schiff, and E. Smadja, Sub-Saharan Africa: A Major Potential Revenue Opportunity for Digital Payments, McKinsey & Company, February 2014.
[2] The Opportunities of Digitizing Payments, A report by the World Bank Development Research Group, the Better Than Cash Alliance, and the Bill & Melinda Gates Foundation to the G20 Global Partnership for Financial Inclusion, August 28, 2014 at http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/10/27/000456286_20141027124326/Rendered/PDF/903050WP0REPLACEMENT0Box385358B00PUBLIC0.pdf.
[3] Id.
[4] Nnake Nweke, Cybersecurity Impact Assessment of Africa’s ‎Broadband Networks, Science and Technology Policy Center for Development, May 2015, at https://www.stpcd.org.
[5] Aaron Kleiner, Paul Nicholas, and Kevin Sullivan, Linking Cybersecurity Policy and Performance, 2014, http://www.microsoft.com/en-us/download/details.aspx?id=36523 and  Tim Rains, The Threat Landscape in Africa in the Second Half of 2011, August 1, 2012, http://blogs.microsoft.com/cybertrust/2012/08/01/the-threat-landscape-in-africa-in-the-second-half-of-2011/
[6] E. Kritzinger and S.H. von Solms, A Framework for Cyber Security in Africa, December 30, 2012, http://www.ibimapublishing.com/journals/JIACS/2012/322399/322399.pdf
[7] E. Kritzinger and S.H. von Solms, A Framework for Cyber Security in Africa, December 30, 2012, http://www.ibimapublishing.com/journals/JIACS/2012/322399/322399.pdf
[8] http://www.bizclim.org/en/images/structure/publication/ezine/pdf/Ezine-2012-13-en.pdf and Henry Quarshie and Alexander Martin-Odoom, “Fighting Cybercrime in Africa”, Computer Science and Engineering, vol. 2, No. 6 (2012), pp. 98-100,  http://article.sapub.org/10.5923.j.computer.20120206.03.html
[9] Sarah Jacobsson Purewal, Hackers Steal $6.7 Million in Cyber Bank Robbery, January 18, 2012, http://www.pcworld.com/article/248340/hackers_steal_6_7_million_in_cyber_bank_robbery.html.
[10] International Data Group Connect, Africa 2013: Cyber-crime, hacking and malware, White Paper. Available from www.idgconnect.com/view_abstract/11401/africa-2013-cyber-crime-hacking-malware.