Supantha and Nqobile Mukherjee

JOHANNESBURG/STOCKHOLM (Reuters) -Africa, with its internationally recognised musical talent – and growing mobile phone use – is central to Swedish music streamer Spotify (NYSE:)’s plans to extend its reach to a billion customers.

The continent is home to over a third the 85 new markets that the company has opened, as African musicians such as Burna Boy from Nigeria and South Africa’s Black Coffee stream across the globe.

Problem is paying on a continent that has more people using a cell phone than having a bank account.

Spotify will need to win the support of telecom firms that are often associated with banks as part of its plan to double its footprint.

Phiona Okumu is Spotify’s Sub-Saharan Africa head of music. She told Reuters that the company obtained “alternative payments methods”, namely M-Pesa when it arrived in Kenya in February.

Safaricom Kenya, Kenya’s top telecoms provider, owns M-Pesa. It is used for sending money, saving, borrowing, and making payments for goods, services, and other items.

Okumu stated that many African countries don’t have credit cards. Spotify also seeks collaborators in Africa.

Okumu stated that he was in talks with partners who can help solve payment issues that many African consumers are facing across different regions of Africa.

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Irene Kophen, who is a Spotify premium user, said M-Pesa was better than bank cards, as mobile money makes music more affordable.

According to the 31-year old, “Most people have access on their phones but few of us have bank accounts or cards.”

Costs associated with opening bank accounts, the distance to financial institutions and the difficulty in meeting “Know Your Customers” requirements because of inadequate proof of address https://accuity.com/accuity-insights-blog/the-future-of-compliance-in-africa-how-to-satisfy-local-and-regional-needs-while-meeting-international-standards have added to the appeal of using phones to pay.

A spokesperson for South Africa’s Absa bank stated in an emailed statement that the focus has been on expanding mobile banking services to lower income groups and those who are unbanked.

According to GSMA, sub-Saharan Africa’s mobile money account numbers had reached 548,000,000 by 2020. That is 12% more than in 2019.

It has given access to banking in Africa, where 43% of subsaharan Africans above the age 15 have a bank account. This is according to the World Bank. They don’t provide any additional data.

Win, Win!

Spotify’s local rivals Mdundo, a Kenyan-based company that is listed on the Danish Stock Exchange, and Boomplay, based in Nigeria have begun to develop ties with mobile operators.

This partnership is based upon telcom providers offering music bundles to customers that provide access to the streaming company’s premium service, and specially-curated music mixes.

Both sides can reap the benefits of collaboration by increasing revenue and subscribers. However, it’s essential for streaming companies.

Charles Stuart, a partner at PwC and director of Technology, Media and Telecommunications, stated that it was crucial for streaming companies to get this right or they could lose revenue from customers who are willing but not able to pay.

Stuart explained that the partnership between the two telecom companies which include Vodacom Tanzania (Airtel Nigeria) and Vodacom Tanzania (Vodacom Nigeria) can increase customer loyalty by adding value.

MTN is Africa’s biggest mobile operator, with 48.9million active mobile money users. Serigne Dioum was the group chief digital officer and fintech officer at MTN. He told Reuters that MTN will integrate its mobile money service into its MusicTime app in order to accept payments.

Dioum from MTN stated that they are looking for players not restricted to music but also those who can reach more people in video, music, and gaming. This will allow them to position digital services better.

Boomplay is a mobile payment platform that allows 60 million users per month to use in Kenya or Tanzania.

According to Tosin Sorinola (Boomplay’s director for artiste relations and media relations), the company aims at introducing this option in Francophone nations.

Mdundo has three partnerships with telcos in Nigeria and Tanzania and had 8.7 millions monthly active users at the end of June. Martin Nielsen, chief executive officer, told Reuters that he expects to sign one or two additional similar agreements before the year ends. His key concern is to bundle with telcos when it comes to Africa payments. Because telcos can reach large numbers of people and have the ability to access their pockets, he stated.