Consultant: Special report on leveraging the acceptance of digital payments by merchants to foster the uptake of Digital Financial Services in Africa At Alliance for Financial Inclusion


The Alliance for Financial Inclusion:

The Alliance for Financial Inclusion (AFI) is the world’s leading organization on financial inclusion policy and regulation. Currently, nearly 100 member institutions make up the AFI network including central banks, ministries of finance and other financial policymaking or regulatory institutions from over 85 developing countries and emerging markets. AFI empowers policymakers to increase the access and usage of quality financial services for the underserved through sustainable and inclusive policies and an effective use of digital technologies.

Policies developed and implemented by the members of the Alliance contribute to a range of the Sustainable Development Goals. by Setting their own agenda, AFI members harness the power of peer learning to develop practical and tested policy reforms that enhance financial inclusion with strategic support from both public and private sector partners.

AFI has 7 Working Groups (WGs): Consumer Empowerment and Market Conduct Working Group (CEMCWG), Digital Financial Services Working Group (DFSWG), Financial Inclusion Data Working Group (FIDWG), Financial Inclusion Strategy Peer Learning Group (FISPLG), Global Standards Proportionality Working Group (GSPWG), Inclusive Green Finance Working Group (IGFWG) and SME Finance Working Group (SMEFWG).

As the key source of policy developments and trends in financial inclusion and as the primary mechanism for generating and incubating technical content in the network, the Working Groups serve as “communities of practice.” Providing a platform for knowledge exchange and peer learning among policymakers to share, deliberate and deepen their understanding, the working groups offer leadership and expertise in their respective policy fields and support the network to monitor new developments in emerging fields. The WGs are supported by a full range of capacity-building courses and events and in-country implementation projects.

The working groups receive strategic guidance and insight from the High-Level Global Standards & Policy Committee, while the Gender Inclusive Finance Committee, supports WGs in integrating gender considerations into all aspects of their work and support members in fulfilling their Denarau Action Plan (2016) commitment to promote women’s financial inclusion.

AFI members have made further commitments in a range of other accords which can be read here.

The AFI’s five regional initiatives support policy implementation in Africa (AfPI), Latin America and the Caribbean (FILAC), the Pacific Islands (PIRI), Eastern Europe and Central Asia (ECAPI) and the Arab Region (FIARI).

2.Introduction and Context

Digital merchant Payments generally refer to a mechanism through which a customer is able to make a payment for goods or services through the use of electronic channels/devices.

Merchant payments are an important usecase in the evolution of Digital Financial Services (DFS). They can lead to greater DFS usage and value-add for consumers and businesses. The digitization of retail payment flows represents a significant use-case for mobile money and an opportunity to reduce reliance on cash and increase digitized payment flows. In 2016, the World Bank estimated that 75 percent of all retail payments in Sub-Saharan Africa, amounting to $1.1 trillion, were transacted in cash. In high-income countries, less than 30 percent of retail payments were made using cash. Thus, the business opportunity for merchant payments being made digitally is significant. The GSMA estimates that globally, the value of cash payments in the retail sector is 100 times more than all the payments made currently on mobile money platforms.

Innovations in technology and business models have resulted in the rise of DFS, which can lower costs and increase speed, transparency, security, and availability of more tailored financial services that can serve the poor at scale. Digitization can reduce frictions in each step along the financial service life cycle, from opening an account to conducting customer due diligence, authenticating transactions, and automating other product-specific processes like assessing creditworthiness. DFS are therefore characterized by low marginal costs per account or transaction and can bring efficiencies of scale and reduce costs. DFS also enhances transparency since every transaction generates a data trail. This data trail furthers the ability of financial services to formally develop a credit-scoring mechanism for informal market participants.

Enabling acceptance of digital merchant payments is increasingly seen as a critical component for the overall development of the digital financial services (DFS) ecosystem and the potential it holds to expand financial inclusion. Transitioning from cash payment acceptance to digital payment acceptance opens up significant opportunities to increase revenue, particularly for MSMEs and DFS providers. While the digitization of merchant payment allows for electronic record keeping of all transactions, the transaction data allows DFS providers to understand customers’ financial behavior better and accordingly offer relevant financial products and services to the customers.

According to a report on “Who will Capture The Merchant Payment Opportunity in Africa”, every year, micro, small and medium-sized enterprises (MSMEs) accept over $19 trillion in cash payments globally. The opportunity to digitize these payments and earn fees is quite significant.

MSMEs are at the forefront of providing goods and services to consumers. They are also economically important, employing between 60% and 70% of the global population. There are about 100 million MSMEs in Africa, with 42 million in Nigeria alone, and retail consumer payments on the continent are expected to top $2.1 trillion by 2025. With 95% of African consumer payments done in cash, the opportunity to digitize payment in the content is significant.

Financial institutions and regulators have an incentive to digitize transactions because it costs countries up to 1.5% of GDP to print, distribute and replace banknotes annually. Yet, the digital infrastructure required to make the cashless economy work is often unstable. At the point of sale, paying with cash is often the easier choice for consumers. Paying with cash is a habit with hidden costs borne by the government; it is accepted everywhere, does not require equipment to process, and is usually a faster transaction than other forms of payment.

The COVID-19 pandemic accelerated the adoption of digital payments across the globe. For example, in Nigeria (Africa’s largest economy), the Nigerian Inter-Bank Settlement System reported that the country experienced an 88% year-on-year growth in electronic payments in Q1 2021. The payments amounted to $155 billion USD. POS collections were up 48%, while mobile payments surged by 189%, evidence that consumers are increasingly using digital channels to make payments.

Regulators have a key role to play here as they push for a cashless economy and establish national standards that encourage interoperability. For example, Ghana and more recently, Nigeria have implemented universal QR solutions facilitating transactions between financial service providers in the respective countries. These moves are encouraging as merchant acquiring is very resource-intensive since the solution needs to be pitched to and accepted by businesses, and merchants are onboarded one at a time.

Research indicates an overall consensus among stakeholders in the DFS ecosystem that digitizing merchant payment is an essential next step in expanding access to DFS for financial inclusion. However, challenges in getting customers to make electronic payments still exist, particularly among low-income customers. Also, despite the numerous advantages of digitizing merchant payments, available research does not indicate much successful implementation of digital merchant payments.


The overall objective of developing a special report on leveraging the acceptance of digital payments by the merchants to foster the uptake of Digital Financial Services (DFS) in Africa is to provide guidance to policymakers in the African region on ways in which they can foster the acceptance of digital payments by merchants through policy interventions.

4. Scope of Work

The broad scope of developing the special report is first to conduct a situation analysis to better understand the current status of digital merchant payments from the demand-side, supply-side, and policy development perspectives. The second is to identify the key challenges facing the Africa region in increasing uptake of digital merchant payments both by the merchants and customers and finally drawing the policy recommendations in an order of importance to overcome the barriers and also to ensure an efficient enabling environment that is conducive to the development of digital merchant payments. The special report will at least include the following elements:

a) Highlight the importance of acceptance of digital payments by merchants in the Africa region. The report should clearly outline the key benefits of accepting digital payments by merchants and advantages for customers to make digital payments at merchant points.

b) Highlight the status of acceptance of digital payments by merchants in Africa. The report should provide a current situation analysis to showcase the evolution and landscape of digital payments made to merchants, including emerging trends and opportunities.

c) Highlight the challenges that impede the prevalent acceptance of merchant payments in Africa. The report should provide a segregation of challenges facing the key players in the DFS ecosystems, including DFS providers, merchants, customers, and financial sector regulators.

d) Highlight critical enablers of digital payment by merchants, including innovations and technologies in use in the Africa region and international best practices, including some case studies of where policy actions have led to successful implementations of the acceptance of digital payments by merchants. Also, include a mapping of possible enablers to face the identified challenges while emphasizing the institutions that should be responsible for implementation.

e) Highlight policy recommendations that can be adopted to increase the acceptance of digital payments by merchants in Africa.

Proposed Technical Approach:

  1. Development of an Analysis Framework and Report Outline.
  2. Identification of key stakeholders who should participate in interviews and surveys to be done by AFI with input from the consultant.
  3. Development of four/five sets of survey/interview questionnaires for conducting surveys/interviews with the AFI member institutions, Financial/Payment Services Providers, FitTechs and others.
  4. Desk research and stakeholders interviews. A total number of 22 interviews which includes AFI member institutions in the Africa region, FSPs, International Development Organizations and other relevant stakeholders.
  5. Data/information analysis and identification of missing information (if any) for policy recommendations.
  6. The first draft of the report developed and shared with AFI for comments
  7. The second draft of the report developed and shared with AFI and member institutions in AfPI for comments.
  8. The final draft of the report developed and shared with AFI and member institutions in AfPI for acceptance.
  9. Powerpoint presentation with a summary of the special report (template to be provided by AFI)
  10. Present the analysis and recommendations (Virtual).


Work is proposed to be undertaken for a period of 3 months, starting from the onboarding of the consultant. The key timelines are summarized in the table below:

Estimated duration – Activities and Deliverables

One week

  • Inception Meeting, Analysis framework, identification of stakeholders, and development of interview instruments

Two weeks

  • Desk research and stakeholders interviews

Three weeks

  • Data/Information analysis and the first draft of the report developed and shared for comments

Two weeks

  • First draft of the report reviewed by AFI

One Week

  • Comments addressed and the second draft of the report shared comments

Two weeks

  • Second draft of the report reviewed by AFI and member institutions in AfPI

One Week

  • Comments addressed and final draft of the report submitted and presented

6. Travel

Travel is not required.

7. Consultant Experience

The consultant undertaking this assignment should have the following experience and qualifications at minimum:

  • Advanced degree in a field related to Economics, Public Policy, International Development or other related disciplines
  • At least seven years of experience in conducting research, assessment in the area of financial inclusion and digital financial services
  • At least five years of experience in DFS and Financial Inclusion policies, particularly in the Africa region
  • Profound subject matter expertise in Digital payments policies in general and merchant payments in particular
  • Deep understanding of the opportunities and challenges in digital merchant payments facing the key players in DFS ecosystem
  • Deep understanding of enabling environment for digital merchant payments in the Africa region
  • Extensive experience with quality report writing (sample of reports authored by the consultant to be provided)

8. Reporting

The consultant will work closely with AFI’s Africa Regional Office and the Policy Programmes and Regional Initiatives (PPRI) Unit. The consultant will report to the Head of Africa Regional Office and will be technically supported by the Technical Specialist PPRI and Policy Manager, ARO.

9. Criteria of Evaluation

The proposals submitted will be evaluated based on the following criteria:

Technical Scoring

1. Academic Qualification; 10%

2. Experience and technical competence of the key staff for the assignment; 50%

  • Adequacy for the assignment 25%
  • Regional/Global experience 25%

3. Adequacy of the proposed work plan and methodology in responding to the Terms of Reference; 30%

  • Technical approach and Methodology 15%
  • Workplan 15%

4. Sample work – Relevance to Assignment and demonstrated experience in writing 10%

Total: 100%

How to apply

Interested applicants are expected to submit a proposal with an updated CV and using the template given (Download the RFP document here) by email to AFI’s Procurement & Contracts Office at by 06th September 2021.

The final decision on the selection of a consultant/consulting firm for this project rests with AFI management team and with the Inquiry. Only shortlisted and successful consultants will be contacted.