Alternative payments are gaining traction in South Africa, with banks and payment companies introducing new solutions.
Recent initiatives include the launch of MasterPass, Zapper, FlickPay and SnapScan. The MasterPass digital
Alternative payments impact South Africa’s payments market
wallet was introduced in association with Standard Bank in July 2014. Users can shop online without disclosing payment and shipping information with every purchase. Zapper, FlickPay and SnapScan are mobile payment solutions that enable consumers to pay using QR codes.
International payment solution provider PayPal has also strengthened its presence in South Africa. PayPal entered South Africa through its domestic partner, First National Bank (FNB), in 2010. The service was initially only available to FNB customers, but in November 2011, FNB extended the service to non-bank customers, allowing them to receive funds from anyone in the PayPal network, regardless of which South African bank they use.
FNB now offers money transfer service to 500,000 consumers with PayPal accounts in the country. PayPal also enables individuals to pay for online purchases with merchants by linking current accounts and credit cards with PayPal accounts.
“Alternative payments such as digital wallet, mobile wallet and carrier billing is gradually becoming a popular mode of payment for online shoppers and the two collectively account for 13.2% of overall e-commerce transaction value in the country. The new payment methods will continue to gain market share in the years to come,” comments, Kartik Challa, Timetric Analyst.
The unbanked population – a market still to be tapped
A significant share of the South African population is still unbanked – nearly 30% of the population aged 15 or above have no access to formal banking. Banks in South Africa are striving towards providing the unbanked population access to formal financial services.
For instance, Absa Bank, Standard Bank, FNB and Nedbank offer the Mzansi account – a low-cost basic savings account that comes with a debit card. Consumers are only required to provide a valid ID to open an account. Banks are also promoting other low-cost accounts: Standard Bank, for example, offers Access, a zero-balance account with no monthly fee.
“The South African government is developing programmes to better serve the unbanked, and is encouraging banks to do the same. Many South African banks now see the unbanked as a key target market – partly in response to government pressure and partly due to the potential it holds. Since a considerable portion of the South Africa population is unbanked, it provides opportunities for banks to access a new consumer base by launching low-cost products and opening branches in rural or remote areas,” concludes Challa.
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