Currently, WhatsApp Pay requires one to connect their credit or debit card as their payment method and to enter their CPF details (Brazilian ID number). Meanwhile, approximately 45 million people - one in every three -  in Brazil are unbanked. Much like in African markets, cash is the preferred method of payment, according to recent data, for over 70% of Brazilians. 

Critical to the proliferation of mobile money and remittance services, as we’ve seen, are agent networks that manage the cash-in, cash-out process for consumers. According to the GSMA, $176 billion cash-in transactions were digitized by mobile money agents globally in 2019 and mobile money agents have seven times the reach of ATMs. In Kenya, that number stretches even further - there are 2,500 ATMs and 160,000 M-Pesa agents!

Assuming Facebook has no plans to invest in a global agent network themselves², it underscores the importance of an open ecosystem and partnership-driven approach for Facebook - to partner with the boots on the ground to match their aerial approach. 

So what will that look like in Africa? Perhaps Facebook’s recent investments in India and Indonesia give us a view into what’s in store in the future for African markets.

Facebook’s investments in Jio and Gojek

Facebook recently announced two investments within short succession - a $5.7 billion investment in Jio, India’s biggest telecom operator, followed by participation in Indonesian ride-hailing and superapp Gojek’s Series F, alongside Paypal, Google and Tencent. 

Let’s start in Indonesia, where Gojek is the market leader in ride-hailing, as is their mobile wallet, GoPay, which is currently accepted at over 400,000 online and offline merchants across the country.  

Facebook Pay, which only launched in November of last year, has not yet launched in Indonesia. And with Facebook’s investment in Gojek, it seems likely that Facebook Pay, once launched in Indonesia, will include GoPay as a payment option. 

It’s a clear win-win for both sides - Facebook needs Gojek in Indonesia where there is a low penetration of credit cards and formal bank accounts. Gojek’s ecosystem will extend Facebook’s reach into the offline and informal marketplaces, which Gojek has and broadened through a series of acquisitions, including an online payment gateway, an offline payments processer, a community savings network, and a mobile point-of-sale company. 

Meanwhile, Facebook’s endeavor to natively integrate payments into their social network(s) clearly has positive implications for reach and the customer journey for its users, and with GoPay as a (preferred) payment option, Gojek can expect to see a continued windfall from a payments and commerce perspective. 

In India - the biggest market for WhatsApp - the stakes are even higher, in what is an even more competitive market. Jio is India’s largest telecom - a (4G) data-only network that boasts nearly 400 million customers, which has taken in over $13bn in equity investment total in the past two months.

While they’ve more or less dominated the telecom space since its commercial launch less than four years ago, they are fighting an uphill battle in a crowded payments and ecommerce marketplace. On the payments front, Google Pay leads, with around 70 million monthly active users, followed by Flipkart’s PhonePe, Amazon Pay and Paytm, the Alibaba and Softbank-backed superapp valued at over $16 billion. And there’s the same players on the commerce side - FlipKart, Amazon and Paytm Mall, which has also endeavored to partner with kirana (corner) stores to facilitate local delivery. 

To be sure, Jio and Facebook appear to be taking all of these competitors on. 

In January, Jio launched JioMart, their initiative doing formal ecommerce (with warehouses of their own) as well as to move kirana stores into the digital commerce space, as well. What’s most compelling is their recent pilot of JioMart orders via WhatsApp -

[Customers] can initiate an order by texting “Hi” to +91-8850008000, which prompts a link that opens a mini store on the browser, allowing them to pick a range of grocery products including toothpaste, snacks, tea and coffee, rice, and cooking oil.

As Facebook has not yet received regulatory approval for a nationwide rollout of WhatsApp Pay, there is not currently a way to pay for these orders digitally. But once they do, we can see how seamless of a customer journey JioMart’s ordering process becomes³, and additionally, the extended reach for JioMart merchants via WhatsApp.

And in digitizing transactions for the informal sector, Jio and Facebook are well equipped to layer additional products and services on top, as we’ve seen Sokowatch do in Kenya, for example, with its financial services offerings for their merchants. 

This is just the tip of the iceberg for Jio and Facebook’s superapp ambitions - with Jio bringing connectivity and content to the partnership (as well as offline infrastructure), Facebook bringing social and payments. Though it remains to be seen what this will look like in India. 

So, what will this look like in Africa?

There are two things made especially clear by Facebook’s recent investments, as well as their launch of WhatsApp Pay in Brazil. First, their prospective partners are those who bring an offline (cash-in) infrastructure to the table. Second, they’re focused on big markets - Brazil is the second-largest market for WhatsApp behind India, and Indonesia itself has a larger population than any one country in Africa. This second point is especially important for WhatsApp Pay, considering Facebook will have to deal with regulators market by market.⁴  

It raises the question - who would make for good partners on the ground once Facebook inevitably turns its eye (and checkbook) towards the continent? Do any startups or fintechs have the scale (yet) that Facebook is invariably seeking in local partners? 

If anyone has the distribution scale in Africa, it’s telcos. To a large extent, M-Pesa is laying much of the same foundation that Jio + Facebook are laying in India. Does an M-Pesa integration with WhatsApp Pay make sense (for Safaricom and Vodacom)? Does that make M-Pesa a prime investment target for Facebook (perhaps emboldened by Safaricom and Vodacom’s recent joint venture to spin M-Pesa out of Vodafone)? On the other hand, should MTN come calling? 

Beyond telcos, Transsion’s activity in Africa is also especially compelling. We have previously discussed their distribution advantage, as Transsion brand cell phones have top market share on the continent. Transsion has tried their hand at a superapp with the launch of PalmPay in Nigeria, which comes preloaded on its phones.  

Meanwhile, PalmPay’s Chinese-backed competitor OPay’s superapp ambitions are built, in part, on their distribution advantage via their parent company Opera, whose web browser is number two in usage in Africa. OPay also claims 40,000 agents throughout Nigeria (Paga, for context, has 25,000). At the same time, some of its “O” services, like ORide, have run into snags, as have other ride-hailing services in Lagos, in particular. ORide has subsequently sold off some of its fleet.

Perhaps we ought to see requisite consolidation - as was seen with Gojek’s aforementioned acquisitions - especially to overcome the existential fragmentation of a continent with 54 countries, and to expedite the path to scale across the continent. Will that initiative be led by startups? Will it be led by private equity acquirers? Will it be led by Facebook? 

It may still be some time before Facebook makes its way to Africa in earnest, but as we see things heating up in other emerging markets, soon too will it on the continent. 

1. I think it’s a fair assumption, though fintechs in Nigeria like OPay have rapidly built out their agent network in a short amount of time. ↩

2. For context, Wiza Jalakasi shared his customer journey when purchasing a product in Nairobi on the digital marketplace Jiji - starting with product discovery on Jiji, then a WhatsApp message to the seller, an M-Pesa payment and shipment via a boda, who acted as escrow for buyer and seller. ↩

3. And MTN, Nigeria’s biggest telco, has yet to be awarded a PSB license to offer mobile money services in the country, and the Central Bank of Nigeria says “there is no timeline to roll out PSB. ↩