Music streamers rely on telephone companies to pay Africa

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FILE PHOTO: Traders look at a computer screen displaying the Spotify brand on April 3, 2018, before going public as a direct listing on the floor of the New York Stock Exchange in New York, USA. Reuters / Lucas Jackson

12 October 2021

By Nakobil Dudla and Supantha Mukherjee

JOHANNESBURG/Stockholm (Reuters) – Sweden’s music streamer Spotify is at the heart of its plan to reach 1 billion subscribers, with internationally recognized music talent and no mobile phone access. Is.

African artists such as Burnt Boy in Nigeria and Black Coffee in South Africa are being streamed around the world, the continent being taken lightly and more than a third of the company’s 85 new markets. ..

The problem is payments on the continent, where many people are more likely to have a mobile phone than a bank account.

In short, Spotify’s first act in implementing a plan to nearly double its footprint announced in February is to beat carriers, which are often comparable with banks.

Spotify’s sub-Saharan African music director, Fiona Okumu, told Reuters he acquired an “alternative payment method,” M-Pesa, when he moved to Kenya in February.

Owned by Kenya’s largest carrier, Safaricom, M-Pesa is used to transfer, save, lend and pay for goods and services.

“Many African countries do not use credit cards because they do not have bank accounts. This is true for many East Africa (countries), and Kenya mostly uses M-Pesa,” Okumu said. Elsewhere in the U.S., Spotify is looking for other allies.

“We are working with the right partners to ensure that we can provide solutions to the payment problems facing African consumers in different parts of the African continent,” Okum said.

mobile money chase

Kenya-based Spotify Premium user Irene Kophen said she prefers M-Pesa to bank cards because she believes mobile money has made music more accessible.

“Most of us have our phones, but many don’t have cards or bank accounts,” the 31-year-old told Reuters.

“Know your customers” requirements are difficult to meet due to the costs associated with opening a bank account, distance from financial institutions and insufficient proof of address future-of- compliance-in-africa-how-to-satisfy-local-and-regional-needs-while-meeting-international-standards has been added to the appeal for payment by phone.

“For the past few years, we have focused on expanding innovative banking services through mobile technology, low-income banks and banks without bank accounts,” a spokesperson for South Africa’s Absa Bank said in an emailed statement. The focus is on acquisitions.”

Mobile industry group GSMA says that as of 2020, there were 548 million mobile money accounts in sub-Saharan Africa, a 12% increase from 2019. This is more than any other part of the world.

According to the World Bank, which does not provide recent data, this would give access to banks on the continent where about 43% of sub-Saharan Africans over the age of 15 had bank accounts in 2017. Rice fields.

win, win

Spotify’s local rivals, such as Kenya-based and Danish-listed Mdundo and Nigeria-based Boomplay, are also beginning to forge relationships with mobile operators.

Such partnerships are based on telco providers selling streaming company premium services and music bundles that give customers access to specially curated music mixes.

Collaboration can benefit both parties by helping to increase revenue and increase subscribers, but it is almost necessary for streaming companies.

Charles Stuart, Partner and Director of Technology, Media and Telecommunications, PwC, said:

Stuart said that for telcos including Airtel Nigeria and Bodacom Tanzania, the partnership can help customers gain “loyalty and persistence” by adding value.

MTN, Africa’s largest mobile operator with 48.9 million active mobile money users, has integrated mobile money services into the MusicTime app to enable payments, said MTN’s Group Chief Digital and Fintech Officer. Serigne Dioum told Reuters.

“We are talking not only to players who are only music players, but also to players who have a wider reach in the music, video and games space and who can better position digital services . “There it is,” said MTN’s Dioum.

With 60 million monthly active users, Boomplay allows users to make payments through mobile platforms such as M-Pesa and Tigo-Pesa in Kenya and Tanzania.

Boomplay artist and media director Tosin Sorinola told Reuters it aims to roll out that option in Francophone countries.

With 8.7 million monthly active users as of June, Madundo has three telecom partnerships in Nigeria and Tanzania, with one or two similar deals expected by the end of this year. Chief executive Martin Nielsen told Reuters. “When it comes to payments across Africa, our main focus is on bundling with telcos… because telcos have access to this range and people’s wallets,” he said.

(Reports by Enkobyl Dudla in Johannesburg and Supanth Mukherjee in Stockholm, edited by Barbara Lewis)


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