Digital Payment and Mobile Wallet Services
Digital Payment and Mobile Wallet Services
Business Model Description
Promote digital payment and wallet solutions to enable low-cost transactions
Expected Impact
Increase financial inclusion and income generation for SMEs via the usage of online payment systems
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Tunisia: South East
- Tunisia: Centre-East
- Tunisia: Centre-West
- Tunisia: South-West
- Tunisia: North-West
- Tunisia: South East
Sector Classification
Financials
Development need
The COVID-19 crisis, in conjunction with underlying weaknesses (high non-performing loans, large credit risk exposure to afflicted businesses and SOEs, and relatively low capital buffers), demonstrated the urgent need for development in the Tunisian financial sector (1,2).
Policy priority
The Ministry of Finance's National Strategy for Financial Inclusion aims to ensure that all economic operators - particularly young people, women, rural populations, and SMEs - have access to a diverse range of financial products that are tailored to their needs and available at affordable prices. Digital finance development is also a critical component of the Strategy (3).
Gender inequalities and marginalization issues
Numerous segments of Tunisian population, particularly in rural regions, are economically excluded. Women are much more impacted than men by institutional discrimination. These factors contribute to the widening of the gender divide and impair women's economic involvement (5).
Investment opportunities introduction
In 2020, financial sector accounted for 1.2% of overall FDI, rising over the previous year. (7) Moreover, digital finance has risen to prominence, particularly with the COVID-19 pandemic, when it became the financial industry's front-runner in delivering critical services (8).
Key bottlenecks introduction
Structural weaknesses of the financial sector include regulations limiting lending rates (no more than around 2% over the average rate), collateral requirements and low digital penetration. Additionally, banking sector vulnerabilities have risen in tandem with the growth of NPLs and the industry's exposure to the public sector (9).
Corporate and Retail Banking
Development need
Tunisia's payment infrastructure, which is mostly supplied by the Post Office (e-Dinar) and banks, has deficiencies. Additionally, the lack of financial inclusion is a concern: Only 27% of Tunisian adults hold a bank account; this figure decreases to only 22.4% in rural regions (10).
Policy priority
Digital inclusion is key in National Strategy for Financial Inclusion and National Strategic Plan "Tunisia Digital 2025" (11). Authorities announced a proposal to phase out cash payments in government offices in favor of mobile payments (12). To promote and support digital financial services, the Central Bank of Tunisia collaborated with the WB on a digital payment workshop (13).
Gender inequalities and marginalization issues
There is a big disparity between men's and women's access to financial services. While 34% of men have a bank account; only 20% of women do so (10). Various factors contribute to the gender difference; in MENA, women had 9% fewer mobile accounts than men, unaffordability and lack of digital skills are barriers to phone ownership (15).
Investment opportunities introduction
Tunisia enjoys one of the highest phone subscriber rates in Africa with 10.3 million Internet subscribers -87% of which through smartphones (26). The COVID-19 crisis prompted authorities to accelerate the use of digital payment options and Tunisians to abandon their "all cash" attitude (14).
Key bottlenecks introduction
First, demand for digital money is low in MENA, owing to consumer mistrust. Data privacy is a concern as well. Cash is favored since it is untraceable. Second, customers in MENA are unfamiliar with financial services, requiring educational efforts. Third, poverty is a barrier, since lack of money is one of the primary reasons people do not have a bank account (12).
Consumer Finance
Pipeline Opportunity
Digital Payment and Mobile Wallet Services
Promote digital payment and wallet solutions to enable low-cost transactions
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
> 25%
6.3 million online transactions (16)
According to the Ministry of Commerce, 6.3 million online transactions with a total value of USD 108.5 million were recorded in 2020, representing a 71% increase in volume and 45% increase in value, compared to 2019 (16).
Indicative Return
> 25%
Investors already active in this area estimate annual returns for innovative solutions in e-payment and digital money to be between 25-30% with a minimum range of 10-15% annual returns. Investors can expect 3-5 times return on their investments.
Investment Timeframe
Short Term (0–5 years)
The average exit timespan for these models is around 5 years according to interviews with companies already active in this sector.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Impact Case
Sustainable Development Need
The Post Office (e-Dinar) and banks provide much of Tunisia's payment infrastructure. Furthermore, financial exclusion is a problem: There are just 27% of Tunisian people with a bank account, and this number drops to only 22.4% in rural areas (18).
Combating irregularity and tax evasion has been a priority in Tunisia's attempts to fund investment projects. Studies show an increase in informal activity after 2011. According to the Tunisian Institute for Strategic Studies, up to 41.5% of the workforce engages in informal activities (18).
Gender & Marginalisation
In Tunisia, there is a large difference in access to financial services between men and women. While 34% of men have a bank account, just 20% of women do (10). Women had 9% fewer mobile accounts than men in the MENA region (19).
The informality problem is particularly acute in certain of the country's interior areas, which get less investment than coastal towns. For example, in the Sidi Bouzid and Kairouan governorates, the informal sector employed 54% and 53.4% of employees, respectively (18).
Expected Development Outcome
Payments digitization is anticipated to enhance financial inclusion and combat irregularity by assistlng individuals in gradually transitioning to the formal sector (18).
Gender & Marginalisation
Access to the usage of financial services benefits not just women and women-led enterprises, but also women's autonomy, enables for more effective use of personal and family resources, and minimizes household and company vulnerability (20).
When digital finance and financial inclusion are combined, the needs of persons with limited access to financial services - in the Tunisian case; women and residents of remote rural regions, - may be met more effectively.
Primary SDGs addressed
8.1.1 Annual growth rate of real GDP per capita
(-0.305315%)
For 2021, growth is temporarily expected to accelerate to 5.9% in Tunisia (9).
10.1.1 Growth rates of household expenditure or income per capita among the bottom 40 per cent of the population and the total population
3450745%
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Public sector
Indirectly impacted stakeholders
People
Outcome Risks
Increased usage of digital payment services may pose new and increased cybersecurity threats.
Online payment services may lead to a confusion for individuals' budget management and may unintentionally drive overconsumption.
Gender inequality and/or marginalization risk: Numerous impediments restrict women's access to financial services, incl. lack of an ID, inaffordability and mobility limits (19,20).
Impact Risks
Since the customers in the MENA region are often inexperienced with or distrustful of digital payment, their expectations need to be well considered for the expected impact to occur.
If the financial inclusion aspect is not embraced by the business model, the digital payment services may not result in the expected impact.
Gender inequality and/or marginalization risk
Impact Classification
What
Enhanced competitiveness and economic development of SMEs and entrepreneurs
Risk
While digital payment services model is proven, customers' expectations and alignment with financial inclusion aspect require consideration.
Impact Thesis
Increase financial inclusion and income generation for SMEs via the usage of online payment systems
Enabling Environment
Policy Environment
The national strategy for digital transformation (2021-2025) is organized around seven axes, including infrastructure development and regionalization of Internet services, financial integration via the promotion of e-commerce and electronic payment (21).
The National Strategy for Financial Inclusion (2018-2022) empowers national actors (BCT, ACM, OIF) to advance the development of digital financial services and distribution channels in underserved areas, with digital financial services playing a central role (22).
In 2019, the Ministry of Finance launched new digital services to make it easier to pay bills, taxes, and other obligations. The Ministry announced this collection of new digital services as part of a national goal to minimize reliance on cash and enhance electronic payments (23).
Tunisia Digital 2020 is a five-year plan aimed at boosting employment and export profits in the ICT industry. Tunisia's digital reference status and the importance of ICT as a lever for socioeconomic growth are the objectives of this strategy (22).
Financial Environment
Financial incentives: Premium for increased added value and competitiveness in direct investment operations in economic sectors for economic efficiency in the sphere of physical investments to regulate contemporary technology and increase productivity, as well as intangible investments (24).
Fiscal incentives: If a business operates in a regional development zone, it is allowed a complete tax exemption of benefits for up to ten years (25).
Other incentives: Subsidies, including revolving capital, are limited to 10% of the project's cost. 30% maximum 3 million TND (USD 1 million) in second regional group; 15% maximum 1.5 million TND (USD 500,000) in first regional group (25).
Regulatory Environment
Until recently, Tunisian law required that financial transactions be managed by only recognized organizations with banking licenses. Electronic payment systems needed at least one Tunisian bank to participate, with payments limited to existing Tunisian bank accounts (23).
On December 31, 2018, the Central Bank released circular 2018-16, allowing new e-payment companies to join the market (23)
Law 2019-47: A cross-cutting law that affects laws across all industries, approved in May 2019. This legislation enabled new financing techniques, strengthened corporate governance standards, and granted the private sector the ability to run a project through a PPP (22).
Marketplace Participants
Private Sector
Tledger, Paymee, Xendpay, ClicToPay, Sobflous
Government
Payments and Banking Supervision Departments within the Tunisian Central Bank (BCT), Financial Inclusion Observatory (OIF), National Financial Inclusion Council (multi-stakeholder, implementing body of National Financial Inclusion Strategy), Central Bank Digital Currency, D17
Multilaterals
European Bank for Reconstruction and Development (EBRD), European Union, Center for Entrepreneurship and Executive Development (CEED), The African Development Bank (AfDB), German Development Agency (GIZ), World Bank, OECD
Non-Profit
Tunisian Union of Industry, Trade and Handicrafts (UTICA), Tunisian General Labour Union (UGTT), NGO Spark, Support to Autonomous Development (ADA)
Target Locations
Tunisia: South East
Tunisia: Centre-East
Tunisia: Centre-West
Tunisia: South-West
Tunisia: North-West
Tunisia: South East
References
- (1) ADA. MicroMED: accélérer l’inclusion financière en Tunisie. https://www.ada-microfinance.org/nos-projets/conseiller-les-institutions-publiques/tunisie
- (2) IMF, 2021. Tunisia: 2021 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Tunisia. https://www.elibrary.imf.org/configurable/content/journals$002f002$002f2021$002f044$002farticle-A002-en.xml?t:ac=journals%24002f002%24002f2021%24002f044%24002farticle-A002-en.xml
- (3) La Presse, 2021. Réduire la masse monétaire en circulation. https://lapresse.tn/85660/reduire-la-masse-monetaire-en-circulation/
- (4) LE COURRIER DE L’INDUSTRIE, 2017. http://www.tunisieindustrie.nat.tn/fr/download/ci/ci135.pdf
- (5) GIZ, 2021. Promotion de la finance digitale. https://www.giz.de/en/downloads/giz2021-fr-promotion-de-la-finance-digitale.pdf
- (6) Smart Tunisia. http://www.smarttunisia.tn/about-us/
- (7) Stakeholders consultations held in 2021.
- (8) Stakeholders consultations held in 2021.
- (9) World Bank, 2020. Tunisia Economic Monitor. https://documents1.worldbank.org/curated/en/194331608565600726/pdf/Tunisia-Economic-Monitor-Rebuilding-the-Potential-of-Tunisian-Firms-Fall-2020.pdf
- (10) AfDB, 2019. FINANCIAL SECTOR MODERNISATION SUPPORT PROGRAMME II - (PAMSFI II). https://www.afdb.org/sites/default/files/documents/projects-and-operations/tunisia-_ar-_financial_sector_modernisation_support.pdf
- (11) Stakeholders consultations held in 2021.
- (12) Oxford Business Group. https://oxfordbusinessgroup.com/analysis/enlarging-base-reducing-informality-will-be-key-increasing-tax-revenue
- (13) BCT, 2021. Annual Report. https://www.bct.gov.tn/bct/siteprod/documents/RA_fr.pdf
- (14) Shops Plus and USAID, 2020. Digital Financial Services in the MENA Region. https://www.shopsplusproject.org/sites/default/files/resources/Digital%20Financial%20Services%20in%20the%20MENA%20Region.pdf
- (15) JeuneAfrique, 2020. Le coronavirus convertit Tunis au paiement mobilehttps://www.jeuneafrique.com/988474/economie/le-coronavirus-convertit-tunis-au-paiement-mobile/
- (16) International Trade Administration, 2021. Tunisia - Country Commercial Guide: e-Commerce. https://www.trade.gov/country-commercial-guides/tunisia-ecommerce
- (17) US Department of State. 2020 Investment Climate Statements: Tunisia. https://www.state.gov/reports/2020-investment-climate-statements/tunisia/
- (18) Oxford Business Group. https://oxfordbusinessgroup.com/analysis/enlarging-base-reducing-informality-will-be-key-increasing-tax-revenue
- (19) Shops Plus and USAID, 2020. Digital Financial Services in the MENA Region. https://www.shopsplusproject.org/sites/default/files/resources/Digital%20Financial%20Services%20in%20the%20MENA%20Region.pdf
- (20) G20 Insights, 2020. Financial Inclusion for Women: A Way Forward. https://www.g20-insights.org/policy_briefs/financial-inclusion-for-women-a-way-forward/#:~:text=Having%20access%20to%20and%20use,of%20their%20households%20and%20businesses
- (21) TMO, 2020. Tunisia Digital Summit: National Digital Transformation Strategy for 2021- 2025 period. https://www.tunisianmonitoronline.com/index.php/2020/10/29/tunisia-digital-summit-national-digital-transformation-strategy-for-2021-2025-period/
- (22) Exportiamo, 2018. “Tunisia Digital 2020”: why invest in Tunisia? https://www.exportiamo.it/aree-tematiche/13719/%E2%80%9Ctunisia-digital-2020%E2%80%9D-why-invest-in-tunisia/#:~:text=%E2%80%9CTunisia%20Digital%202020%E2%80%9D%20is%20a,lever%20for%20socio%2Deconomic%20development.
- (23) Export.gov, 2019. Tunisia - eCommerce. https://www.export.gov/apex/article2?id=Tunisia-eCommerce
- (24) Alexander and Partner, 2020. Investment Promotion Regime in Tunisia. https://www.alexander-partner.com/publications/investment-promotion-regime-in-tunisia/
- (25) Invest in Tunisia. Incentive Legislation. http://www.investintunisia.tn/En/incentive-legislation_11_24
- (26) International Trade Administration, 2021. Telecommunications Equipment & Services. https://www.trade.gov/country-commercial-guides/tunisia-telecommunications-equipment-services