Credit card issuers aren’t exactly known for taking the moral high ground in their business practices, but the industry hit a new low this past Tuesday. According to All Africa Global Media, Visa and MasterCard have officially launched a new campaign to get millions of people in poor regions of Africa to sign up for credit cards. These companies have set up tents in impoverished countries like Rwanda – yes, the place Hotel Rwanda is about – and they’re hocking their wares to anyone who’s willing to listen.
Maybe we don’t understand international politics, but credit cards seem like the last thing the poorest of Africa’s citizens need. On a continent torn by war, ravaged by disease and largely ignorant about the mechanics of loan repayment, giving people the ability to rack up a balance will only make things worse. After all, Africa’s economy is among the weakest in the world. In Africa, it’s still possible to find entire cultures with no exposure to technology whatsoever thriving in the interior of the continent. And in other rural spots, it’s going to be quite difficult to transfer a balance or to pay more than the minimum on a bill.
But major corporations like Visa and MasterCard can’t be bothered with things like their customers’ well-being. They’re concerned with the margins. According the report, Visa currently earns 57% of its income from North America. But, due to the decline of the American economy, the company would like to earn the majority of its revenue from international markets by 2015. As a result, they’re targeting the untapped markets.
Experts have valued Africa’s untapped banking market at more than $100 billion, especially the mobile banking market. According to Electronic Payment International, the number of unbanked Africans with cell phones is expected to grow to 1.7 billion this summer, and the annual rate of growth of mobile money in countries like Kenya is as high as 44.9%. That’s a lot of money waiting to be made, especially when you consider that some U.S. banks charge customers as much as $3 per mobile banking transaction.
Still, it seems criminally irresponsible to hand millions of impoverished – excuse us, “unbanked” – African citizens credit cards and mobile wallet apps that charge them interest rates and transaction fees for the sake of making a buck. It’s not as if banks and credit cards don’t exist in Africa already. There are millions of credit cards in use throughout Africa every day. They just belong to the middle classes, in the established economies.
So why are Visa and MasterCard pushing to flood countries that have inflation rates as high as 6.5 quindecillion novemdecillion percent with credit cards? Simply put – to get control. By saturating emerging weak-dollar markets with cash alternatives, Visa and MasterCard can make their products the dominant form of currency throughout entire countries. It’s a move that harkens back to the factory towns and company currency that corporations used to control their workers during the Industrial Revolution.
But it’s all just business to the credit card issuers. According to the Africa News article, “In Visa’s view, widespread use of mobile money may surpass credit card and cash use in Africa. If credit card firms don’t get a piece of the pie now, they’re worried they may miss out.”
We wouldn’t want that to happen, now would we?