New Payment Methods in Cape Verde: Digital Solutions for a Growing Economy

Cape Verde, with its strategic location in the Atlantic Ocean, has historically been a trade hub. The nation’s reliance on tourism and remittances has spurred innovation in the financial sector, with new digital payment methods now emerging. From mobile money solutions to digital wallets, Cape Verdeans are increasingly shifting from cash-based transactions to more convenient digital alternatives. This transition is essential as the country strives to diversify its economy and modernise its financial landscape.

The State of Banking in Cape Verde

Cape Verde's banking system, though functional, faces challenges in reaching rural and remote areas of the country. With over 60% of the population living on the islands of Santiago and São Vicente, access to banking services is limited for many people, particularly in smaller and more isolated communities. Traditional banking services are concentrated in urban areas, leaving a significant portion of the population without access to financial services.

However, Cape Verde has witnessed a surge in mobile banking solutions and digital payment services. Services such as TugaPay and CashU are making banking more accessible, allowing users to perform transactions via mobile phones. These platforms are crucial in increasing financial inclusion and ensuring more people have access to secure financial systems.

Neobanks and Fintech Innovations

While traditional banking is still dominant, neobanks and fintech solutions are emerging as key players in Cape Verde. These digital banks offer customers an entirely online banking experience, with no need for physical branches. Revolut and N26, two global fintech brands, are examples of how Cape Verdeans are increasingly turning to online banking solutions that provide a range of services, from international payments to currency exchange.

As of 2021, around 45% of Cape Verdeans had access to mobile banking services, a number that is expected to rise as more fintech solutions enter the market. Cape Verde’s financial infrastructure is modernising, and with an increasing number of mobile phone users, the potential for digital payment adoption is vast.

The Role of Digital Payments in Financial Inclusion

Digital payments are not just about convenience—they are about inclusion. With an estimated 10% of Cape Verde’s population using traditional banking services, there remains a significant gap in financial accessibility. However, mobile money and digital payment solutions are helping to bridge that gap. These services provide the unbanked population with access to services such as mobile transfers, bill payments, and micro-loans.

For instance, mobile remittance services allow Cape Verdeans abroad to send money home cheaply and quickly, helping to sustain the nation’s economy, which relies heavily on remittances. With the average cost of sending money to Cape Verde lower than the global average of 6.5%, these mobile platforms are essential for enabling financial inclusion for many.