Platform Africa recently met with Fabrice Konan of Visa who is their Senior Director and Country Lead Indian Ocean Islands & Djibouti. In the second part of the interview, Fabrice shares his perspectives on the rapidly evolving payments landscape in Mauritius, and on how merchant acceptance of digital payments might be the final piece of the puzzle for the island economy to truly transform into a regional FinTech hub.
In terms of the wider Indian Ocean region, Fabrice also offers his insights on the situation in Madagascar, where he advocates that a collective response with the right partners on board can effectively serve the distinctive needs of the Malagasy people and SMEs to support the national economy.
Edited excerpts from an exclusive interview:
Let’s start on the digital side. Mauritius is very well banked as compared to Madagascar or others that we can mention. But when we look at the merchants, only 20% are accepting card payments. How is Visa involved in the payment landscape in Mauritius, where we now benefit from instant payments and see mobile infrastructure being developed by different players be it MCB, Emtel, Bank One or Mauritius Telecom?
To begin with, I must mention that we love competition because competition is really what is triggering these innovations. People want to address a need by innovating on something and we love it. For us, what is important is a level playing field. We have our own rails, other entities have their rails, and we just compete. And the consumer or the businesses will decide what is the best experience that they want to adopt. I’m really happy with what’s happening in Mauritius over the past four to five years. First came MCB with the Juice platform, and then My.T, then POP, and finally blink. So really, if I’m a Mauritian, there are so many options for me to pay.
We firmly believe that the contactless experience is a very interesting one. It’s about a quick and secure experience applicable to your everyday purchase. And that’s why we have invested from 2020 on how do we drive that. We are pretty satisfied with the result of that initiative. We were at 0.5% penetration of contactless transactions in September 2020. Three years later, we are at 45%. So I think probably Mauritius is in the top three in Sub-Saharan Africa in terms of contactless penetration, which we are pretty proud of. It’s part of the collective work, but I think we have been extremely bullish about it. And we will continue deploying efforts in that direction – we held a campaign this festive season period which was really to encourage people to enjoy and experience that way of paying.
I think that’s extremely important because it’s about changing your behaviours since the next shift will be – how do you think about paying with your mobile phone by simply tapping? This is a trend we already see in different markets with the ‘global pays’ which have completely changed the landscape, such as Apple Pay and Google Pay as part of the ecosystem, an experience which people will enjoy, but at the end, which is extremely secure and convenient for them. So, we understand that there are other ways to pay, where we may choose to compete or collaborate. You will certainly hear of collaborations between Visa and non-traditional players in Mauritius to offer additional digital payment options in Mauritius. Sometimes you compete, sometimes you collaborate, because the aim is at the end really to foster an increase of the payment ecosystem for the good of the people who are using those means for everyday purchases.
You’ve talked in some past interviews about a move to a cashless society whether in Mauritius or elsewhere. What is your estimate of the island economy’s time to transition to a cashless society based on your own statistics?
I’m very close to Mauritius, so I would say that Mauritius took some pretty interesting steps towards that ambition of a cashlite society, but cash circulation is still massive in this island. I was just discussing the situation with a friend since the festive season was around the corner. So, there are a few shops in downtown Port Louis here, but you will see that people will just withdraw cash before they visit the shops because those merchants are simply not geared for digital payments. Mauritius has solid fundamentals. We have almost 2 million cards, more cards than people! We have some of the key segments which are equipped from acceptance standpoint – be it supermarkets, pharmacies, food and grocery, or restaurants. So I think Mauritius is really going in the right direction. We just need to continue, with the support of our partners and the regulators, to address the pain points which are mainly around acceptance.
Given your role and perspective in the region, how do you perceive the situation of Madagascar? What can you tell us about Visa’s activities in the country?
Despite significant challenges, Madagascar represents a huge opportunity for us to uplift people by mass accelerating digital payments.
We think that it’s going to be difficult to make things happen in Madagascar without relevant partnerships and that’s what we have decided to follow as an approach – To partner with Financial Institutions/Fintechs which are hungry to offer services to the underserved people, which are a massive population in Madagascar. That’s why four years ago we decided to partner with the two main players of the mobile money market in Madagascar – Mvola and Orange Money.
Mvola is the mobile money arm of the AXIAN Group, which owns Telma – the number one telco in Madagascar. We launched with them in October 2020 a companion physical card to the mVola wallet; this companion card gives the possibility to Mvola users to do physical card transactions at merchants in the island and abroad, as well as buy goods and services online. With Orange Money, we launched in November 2022 straightaway a virtual card which enables people from the comfort of their home on a mobile phone to buy online, i.e on Fnac.com in France, on Amazon.com etc. without travelling. We observed that it’s a pretty interesting scaling trend of transactions from those Visa credentials as people are really eager to participate in global commerce. It’s really something the young people are hugely interested in. They sometimes have a little money, but they can pay for Netflix, they can do things that they couldn’t dream about because they don’t have a bank account. So we will continue to work around that.
How can we offer around the mobile services which are extremely relevant to the population? We are not going to do copy-paste but we will continue to explore and understand the really distinctive needs of the Malagasy and see how to best fulfil them together with partners, which are not just the mobile network operators, but also Financial Institutions. So we need to be able to build a collective response towards how can we offer the best experience. It involves technology, it involves pricing, and it also involves a proper alignment with the regulatory authorities. We need to ensure that we fully understand how we can bring value to the economy of the country, together with our partners including governments. That’s where we probably haven’t been aggressive enough, we are then more than eager to significantly increase our efforts in that direction.
We need to do much more for the SMEs, because Madagascar has a very vibrant private sector with many SMEs, which are dominantly using cash for their payment transactions. So how do you bring your solutions, which are equivalent or better than what they have today, and that’s really our challenge. And again, the challenge cannot be overcome in isolation. We have to be partnering with the right entities, with the right drive to make it happen.
Coming back to merchants, Mauritius has players like MIPS and others that are coming up with their own merchant solutions. How is Visa dealing with different merchants and routers? How do you work with merchants to try to square this end of the circle?
Traditionally our payment ecosystem is the four-party model with the consumer on one side, the merchant on the other side, respectively supported by the issuing entity and the acquiring one. Now, in our four-party model, there are other players who are there like MIPS, we can call them payment aggregators or payment facilitators. Those are entities which can help to onboard merchants, which can bring solutions to process the transaction more effectively and simplify the life of the acquiring banks.
I think it’s important because those players are not just bringing basic payment services, they are also bringing additional value-added services. It’s important for the merchant to understand that ‘this is the business I’m doing, this is the transaction, how can I get reports’ – things like that. To understand, how am I really making money, and how to transparently keep track of what I’m doing. Is it something that can help me to get working capital support from banks?
So it’s important that you bring those value-adds to the merchant, and I think players like MIPS and other payment facilitators are critical. That’s why we have special programmes to fast track the onboarding of those entities to the payment ecosystem to come and help us to really us scaling the number of merchants in the Visa Ecosystem. We have been running a similar program for the FinTechs interested in issuing Visa credentials, the FinTech Fast Track Programme, started in 2018. The latter aim was to help the FinTechs to integrate the Visa Payment Ecosystem and support Visa digital mass issuance plans.
In most of the cases, the payment facilitators are targeting the small retailers/merchants, which are very sensitive about the cost of digital acceptance. Hence for them it is really about trying to find the right technology for the right price model.
We also want to change the narrative, which is about how you can maximise your revenue as a small merchant. So that is the missing piece. And if you go and discuss with some of the merchants in Port Louis they will tell you, ‘No, you want to take a 1% commission, that’s too much’! But have you thought about how much more revenue can you do? Personally, I’m almost cashless. I’ve never withdrawn any Mauritian rupee when I come to Mauritius. So if I see a very beautiful thing I want to buy and you don’t offer me a payment method which is digital, then I don’t buy it. So this is what you potentially miss as an opportunity, particularly in a country which is a tourist destination, where people are walking around sightseeing, and you interrupt their journey to tell them they have to go to the ATM. This is a hassle! Payment has to be a flawless and simple experience. So, this is really what we have to address.
I don’t think we are yet there while there are a lot of efforts by stakeholders like MIPS and a few banks in Mauritius. A few months ago one of the major banks in Mauritius launched an acceptance solution for SMEs, in partnership with MIPS. We also discussed with other players how can they really have a proper focus on those SMEs. And again, we are not saying it’s going to be easy, but it’s worth trying to bring at least a big part of those merchants into the formal economy by accepting digital products. For that, it’s also important to understand the right price point, the right price model, to help the merchant cross the hurdle of getting into digital acceptance, and they will see the benefits.
In Mauritius, the FSC has recently launched a consultation about the financial services sector in the metaverse. We now have a national QR codes and virtual wallets, and we may have a pilot CBDC. Has Visa played any part in CBDC initiatives so far, in Mauritius or in other parts of Africa?
Let me put it like this – We give our views and of course from a sovereignty standpoint, each central bank decides the way it wants to go. There are a few CBDCs already launched, I think the eNaira in Nigeria was the first one in Africa, in 2021. I know that the Bank of Mauritius is currently exploring and some of the other central banks in Africa are still in reflection mode. So I think it’s good if the ambition is really to take the respective ecosystems to another step of digitalisation.
My humble view is that before even going there, there are so many fundamentals that we need to continue to address because it’s about ensuring that we have merchants which are accepting digital payments. So yes, we are thinking about what is the next phase, but let’s just fight on really closing the gaps that we have – and we still have a lot of gaps. If we don’t do that, it may defeat the purpose of what we are planning to do. Or it’s like trying to leapfrog without addressing some of the critical table stake points or fundamentals that are going to help to see those initiatives really scale.
How would you sum up your experience in Mauritius?
In Mauritius, it’s the warmth of the people, and I think this country has a lot to teach to many markets. I’m really happy that we have made big strides over the past five years. And again, to make strides is not about inventing a rocket but just addressing the key fundamentals. So we had an issue not about the number of cards, because people have too many cards, but it’s about ensuring that the cards remain relevant. So we also want to really incentivise people to actually use the cards. That’s why you see a lot of campaigns that we’re doing, some of which are with large supermarket outlets.
We now need to keep a closer eye on the SMEs. We need to really properly articulate the CVP or the customer value proposition for them to have a chance to move to the acceptance world. And, last but not least, continue to orchestrate efficiently with humility an ecosystem which is about our banks, our FinTechs, our payment facilitators, and also our government entities be it the central bank, or the Ministry of Finance, everyone who has a stake in the payment ecosystem, all of us just need to look together in the same direction. We may have different views on some details, but the main direction should be the same, which is going towards a cashless society.
