Spotify, More Music Streamers Turn to Telcos to Facilitate Africa Payments


Africa, with its internationally recognized music talent – ​​and rising mobile phone usage – is central to Swedish music streamer Spotify’s plan to expand its reach to a billion subscribers.

As African artists such as Nigeria’s Burna Boy and South Africa’s Black Coffee streamed around the world, the continent was seen as an obvious choice and it accounted for more than a third of the company’s 85 new markets. is home.

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

His vote Spotify’s The first task of implementing the plan announced in February is to nearly double its footprint to win over telcos that are often on par with banks.

Spotify’s head of music for sub-Saharan Africa Fiona Okumu told Reuters that the company secured “alternative payment methods,” namely M-Pesa, when it moved to Kenya in February.

Owned by Kenya’s largest telecommunications operator, Safaricom, M-Pesa is used to send, save, borrow money and pay for goods and services.

Okumu said, “A lot of African countries are unbanked, that means they don’t use credit cards and the same is true for a lot of East African[countries]and in Kenya you can find M-Pesa for the most part. make use of.” Elsewhere in Africa, Spotify is looking for other partners.

“We are in talks with the right partners to ensure that we are providing solutions to the payment problems that many African consumers face in different parts of the continent,” Okumu said.

mobile money chase

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

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

Due to the costs associated with opening bank accounts, distance from financial institutions, and difficulty meeting “Know Your Customer” requirements insufficient proof of address Added to the appeal of using the phone to make payments.

A spokesperson for South Africa’s Absa Bank said in an emailed statement, “Over the years there has been an emphasis on expanding to innovative banking services through mobile technology to capture low-income areas and unbanked people.” To be.”

Mobile industry body GSMA said that as of 2020, there were 548 million mobile money accounts in sub-Saharan Africa, a 12 percent increase from 2019.

This has given banking access to a continent where, according to the World Bank, about 43 percent of sub-Saharan Africans over the age of 15 had a bank account in 2017, which has provided no more recent data.

win, win

Spotify’s local rivals, such as Kenya-based and Danish-listed Mdundo and Nigeria-headquartered Boomplay, have also started forging relationships with mobile operators.

Such partnerships are based on telecommunications providers selling music bundles that give customers access to the streaming company’s premium service and specially curated music mixes.

Collaboration can benefit both parties by helping to increase revenue and increase subscribers, but it’s all but essential for streaming companies.

“It is important that streaming companies get this right, or else they will lose revenue from consumers who were unable to pay them but were unable to pay them,” said Charles Stuart, PwC partner and director of technology, media and telecommunications he said.

for telecommunications companies, including Airtel Nigeria and VodaCom In Tanzania, the partnership can help achieve customer “loyalty and stickiness” by adding value, Stuart said.

MTN, Africa’s largest mobile operator with 48.9 million active mobile money users, is integrating its mobile money service on its MusicTime app to allow payments, Serigne Diom, Group Chief Digital and Fintech Officer at MTN, told Reuters. Told.

MTN’s Diom said, “We’re talking to players who are just music players and we’re also talking to players who have broader access to music, video and gaming and who will better position our digital services.” Can bring.”

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

It aims to roll out that option in Francophone countries, Boomplay’s artist and director of media relations Tosin Sorriola told Reuters.

Chief Executive Officer Martin Nielsen told Reuters that there are three telecom partnerships in Mdundo, Nigeria and Tanzania with 8.7 million monthly active users as of June, and one or two similar deals are expected before the end of this year. “When it comes to payments across Africa, our main focus is to engage with telecommunications companies…

© Thomson Reuters 2021