The History of Cards in Africa

Africa's financial landscape is a mix of old and new: bustling markets filled with cash exchanges while smartphones buzz with mobile money notifications. Amid this duality is the rise of cards, tools that have become widespread in many parts of the world but have taken a unique journey across the African continent. This journey has been shaped by Africa's diverse socio-economic realities, technological innovations, and cultural attitudes toward money and banking.

This article explores how cards have evolved into a strategic bridge between traditional and modern payment systems, combining the strengths of cash with the speed, security and agility of digital payments.

The Cash Era

For much of its history, cash has been the backbone of commerce in Africa. Even today, cash remains the dominant form of payment, accounting for over 90% of transactions in sub-Saharan Africa. This cash-first preference is not merely cultural but a reflection of a system built over generations. In 2021, according to the World Bank, only 55% of adults in sub-Saharan Africa had an account with a bank or other financial institution. This means hundreds of millions remain unbanked, relying on cash for daily transactions.

The reasons for this cash dependency are multifaceted. Limited banking infrastructure, low urbanisation rates, and high costs associated with formal banking have all played a role. For example, sub-Saharan Africa has an average of just 5 bank branches and 6.94 ATMs per 100,000 adults. In rural areas, where 57% of the population resides, access to financial services is even more limited.

Cards have emerged as a complementary tool connecting to the broader financial ecosystem. They initially appeared as a niche solution, hindered by the same infrastructural gaps that kept formal banking out of reach for millions.

The Arrival of Bank Cards: A Slow but Steady Start

The global story of bank cards began in the mid-20th century, with the introduction of credit and debit cards revolutionising how people accessed and spent money. However, in Africa, the adoption of these tools lagged. Early efforts to introduce cards faced significant hurdles, including a lack of infrastructure, high transaction costs, and low trust in formal financial institutions.

Debit cards, which allow users to access funds directly from their bank accounts, were the first to gain traction. By 2021, the average debit card penetration in sub-Saharan Africa stood at 18%, far below the global average of 51%. However, this figure masks significant regional disparities. With its well-developed banking system, Mauritius boasts a debit card penetration rate of over 80%, while Sierra Leone sits at the other end of the spectrum with just 1.4%.

Credit cards, on the other hand, have seen even slower adoption. In many African countries, credit card penetration remains below 5%, reflecting both the challenges of credit access and a cultural preference for avoiding debt.

The Rise of Prepaid Cards: Bridging the Old and the New

In recent years, prepaid cards have emerged as a powerful tool for financial inclusion in Africa. Unlike traditional debit or credit cards, prepaid cards do not require users to have a bank account. Instead, they can be loaded with funds for various transactions, from everyday purchases to cross-border payments. This flexibility has made them particularly appealing to Africa’s unbanked and underbanked populations.

Take Nigeria for example. Even though many Nigerians continue to rely heavily on cash, the prepaid card market there is on a steep upward trajectory. The country’s prepaid card market is expected to more than double in value, from US$9.20 billion in 2023 to US$20.16 billion by 2028. The COVID-19 pandemic accelerated this growth as more consumers turned to digital payment options. The Central Bank of Nigeria’s decision to introduce new banknotes and cap withdrawals of the notes in late 2022 further spurred the adoption of prepaid cards as people sought cash alternatives.

Virtual prepaid cards, which exist solely in digital form, have also gained traction. These cards are cheaper to issue and more secure against fraud, making them an attractive option for consumers and financial institutions. They are particularly popular for e-commerce and cross-border transactions, where Africa’s digital economy is rapidly expanding.

Innovations Driving Card Adoption in Africa

The rise of card-based payments in Africa has been driven by innovation as financial institutions and fintech companies strive to address the continent’s unique challenges.

Here are some of the key developments:

Agency Banking

By partnering with local agents, banks have extended their reach into rural and underserved areas. These agents act as intermediaries, facilitating cash-to-digital conversions and allowing customers to load funds onto prepaid cards. In Kenya, for example, the agency banking model has been instrumental in demystifying banking for low-income populations and driving the adoption of digital financial services.

Interoperability

One of the most exciting developments in Africa’s payments landscape is the growing interoperability between card systems and alternative stores of value like mobile money. Companies like Onafriq lead the charge, enabling seamless transfers between prepaid cards and mobile wallets. This integration is crucial in a region where mobile money accounts are hugely popular, with over 1.75 billion registered accounts as of 2022.

Custom Solutions for Local Needs

Fintech startups are designing card-based solutions tailored to the specific needs of African consumers.

Djamo, a fintech company serving Francophone Africa, offers Visa-powered debit cards linked to mobile money wallets. These cards allow users to manage their finances and make digital payments seamlessly.

Similarly, the University of Ghana introduced a multi-purpose card for students and staff, combining identification, library access, and payment functionalities.

The Scaling Challenge: Lessons from Ghana’s Fidelity Bank

While innovation has driven progress, scaling card adoption in Africa remains challenging. A 2018 report by the Partnership for Financial Inclusion (PFI) cites Ghana’s Fidelity Bank as an example. In 2013, the bank launched its Smart Account, a card-based product designed to reach unbanked Ghanaians through a network of 1,000 banking agents. Initially, the project saw rapid success: agents multiplied, accounts surged, and transaction volumes climbed.

But by 2017, the product was discontinued. Analysts pointed to two critical flaws: the novelty of agent banking in Ghana and an inflexible technical system that buckled under growing demand. The bank had prioritised account openings over usage, failing to ask a vital question: Were customers actually benefiting from the product?

As Richard Chamboko, writing for the FinMark Trust’s insight2impact team later that year, explains, “Opening an account incurs costs for providers, which providers intend to recoup when consumers use the accounts. When the account isn’t used, providers are unable to recoup their costs for opening and keeping open accounts. And so, the sustainability of the product is undermined.” The episode underscores a key lesson for Africa’s card revolution: technology alone isn’t enough. Success hinges on understanding user behaviour, designing flexible systems, and creating value for both customers and providers.

This story highlights a broader truth about Africa’s financial inclusion journey: scaling solutions demands collaboration, adaptability, and a deep understanding of local contexts.

The Road Ahead: Cards as Catalysts for Financial Inclusion

The history of cards in Africa is more than a story of technological adoption—it’s a testament to the continent’s resilience and ingenuity. From the dominance of cash to the disruptive rise of mobile money and now cards as a bridge to the global economy, each stage has built on the last, creating a financial ecosystem that is uniquely African—rooted in local realities but increasingly connected to the world.

As Africa’s financial ecosystem continues to evolve, cards are poised to play an increasingly important role. Their versatility makes them a powerful tool for financial inclusion, particularly when combined with mobile money and other digital payment solutions. Prepaid cards, in particular, offer a scalable and cost-effective way to bring millions of unbanked Africans into the formal financial system.

A Payment Revolution in the Making

Africa’s journey towards cards is far from over, but the progress is undeniable. What began as a slow and uneven adoption of cards has evolved into a dynamic and innovative payment system.

By leveraging the convenience and versatility of cards, Africa is transforming how people pay and enabling new opportunities for economic growth and development. The future of payments in Africa is bright, and cards are at the heart of this exciting transformation.