The way that people around the world pay for services and goods is constantly evolving. However, it is not certain which route consumers will choose.
We have no shortage of ways to process credit cards today. There has been a global migration away from cash to bank cards then mobile payments. And we are already starting to see the online credit card processing market take off.
In South Africa, the acceptance of these mass-market digital payments is predicted to be slow when compared to the fast pace of innovation in more developed countries. However, this evolution is inevitable, nonetheless.
Below are some of the current methods of credit card processing in South Africa and detailed the future of this industry.
- POS Credit Card Processing
POS, short for point-of-sale, credit card processing includes any terminal through which a client or customer can use their credit card in order to make a payment. This includes the traditional countertop and retail credit card machines (tap, swipe and chip methods included), PIN pads, wireless and mobile readers, card swipers as well as small printers.
mPOS or mobile point-of-sale devices were extremely disruptive when they first arrived since they provided an easy and sleek way for all merchants to accept card payments. Now, consumers expect suppliers and merchants everywhere to start accepting cards, so mPOS credit card terminals have become more crucial than ever.
In order to increase the uptake of mPOS or mobile POS among medium and small-sized merchants, most solution providers in South Africa are now offering credit card terminals at lower costs. And one of the first technology introduced was the edge mPOS by Emerge Mobile, a South African-based technology provider.
This solution released in 2014 only costs ZAR1,000 and comes with a free mobile app compatible with Android and iOS. Similarly, Nedbank launched the PocketPOS in the same year. This introduction of the low-cost terminals is expected to encourage merchants and businesses to accept a card-based payment, driving the payment card transaction values and volumes.
- The Rise of Contactless Card Machines
Contactless payment refers to technologies such as “tap-and-go” that allows users to make instant payments without entering any passwords or scanning QR codes.
The number of bank cards in circulation that support NFC payments have also increased in South Africa. However, the number of payment terminals that accept this kind of payment still lagged behind.
Even though many retailers have already upgraded their old POS systems to NFC-compatible terminals, it’s still impossible to depend entirely on contactless payments. You’ll still need to carry your bank card or even rely on apps such as the Samsung Pay that use Magnetic Secure transmission tech in addition to NFC support.
Nonetheless, most South African bank is trying to support contactless card processing.
An African bank, FNB, revealed that 80 percent of its POS credit card terminals are NFC-enabled.They are also actively replacing older terminal devices with a contactless-enabled hardware. They believe that universal adoption of these NFC-enabled POS devices can significantly improve the efficiency and safety of payments for consumers and merchants. It also helps reduce queues by improving the speed of transactions.
- Acceptance of Mobile Payments
The lack of providing added value for mobile payment processing compared to the plastic or cash payment has beenthe cause of the very modest acceptance of digital payments to date.
However, with APIs and open banking providing the capability to enhance customer experience with instant alerts, rewards and more, the acceptance of mobile payments could be on the verge of significant growth.
Mobile payment processing allows a merchant to leave their traditional brick-and-mortar stores and take their operations on the go. This mobile POS allows companies to perform transactions at sporting events, food trucks, and school functions and even inside a client’s home.
Mobile payments are also frictionless, a problem with EMV cards. These chip cards definitely provide an extra security layer, however, they are slower to process due to the 2-step procedures and usually giving frustrations to shoppers on the checkout line. This could encourage more users to try mobile wallets that often involve a simple tap on their smartphone screen to process their payment.
In addition, younger consumers are demanding a seamless digital payment experience on all platforms, especially on their smartphones. They also want to be compensated through targeted discounts, offers, rewards at low rates. These younger consumersultimately force traditional banks and payment providers in South Africa to either think beyond the functional aspect of mobile payment apps while creating an engaging customer experience. Otherwise, they risk getting squeezed out in the process.
- Payment Gateways
These are essentially the first step in the online payment process. They help e-commerce companies accept online transactions and serve as the online version of payment terminal as well as a front-end processor for both mobile and online sellers.
Alternative payment gateways are gaining traction in South Africa with payment provides and developers introducing new solutions. South African Payment Gateways such as i-Pay, PayFast, and PayGate often sell bundled services which include payment acceptance, fraud management, and data reporting.
Coindirect, a leading cryptocurrency payment wallet and platform, has announced a new and innovative business-to-business (B2B) crypto payment solution that is designed to facilitate borderless trades and transactionswithin a transparent and secure environment.
This payment solution allows merchants to receive payments in Bitcoin and other variety of cryptocurrencies with only a small 1 percent merchant fee. This platform accepts cryptocurrency pay-outs and pay-ins both locally and globally allowing for the funds to be placed into the merchant bank account.
This payment platform has also been designed to address some significant issues that affect the current cryptocurrency payments in local markets. It allows for a 15-minute payment window as well as providing a guaranteed ZAR/BTC rate. The payment is treated as legitimate and “seen” from the time it arrives in the mempool.
This bypasses some of the challenges that influence cryptocurrency payments in the past years. This includes the delays on verification as well as the limited timescales within which to complete a successful transaction.
The South African credit card payment market has limited to no access to transparent, secure and cost-effective B2B payments. But, with this cryptocurrency paymentplatform, it allows merchants to accept payments globally, affordably and instantly, receiving fial without currency risk.
In addition, Coindirect also announced that clients can now buy Bitcoin and other cryptocurrency variety on its platform using credit cards. This pioneers the development of cryptocurrency market in South Africa which has not yet tried credit cards to crypto payments.
It now has one of the biggest offerings of cryptocurrencies in South Africa and stands as the only exchange in the country that offers credit card payments.
Future of Credit Card Payments
The foundation of the future of credit card payments in South Africa will be based on two factors: efficiency and speed.
Although South Africa is still a cash country, South African companies are staying ahead of the trends in the payments ecosystem and understand that these two factors are substantial for customers.
To that end, mobile payments will be the wave of South Africa’s credit card payment future. Samsung Pay, Apple Pay, Microsoft Wallet, Android Pay and more will become the habitual way for shoppers to pay— reaching out for their smartphones rather than their wallets.
Mobile payments in South Africa will be slower than anticipated, however, the volume will pick up significantly by 2020 with at least half of the country’s population will at least try a mobile wallet.
The future of credit card payments is crucial to the health of the payments ecosystem as a whole. However, it is also just a piece of a much larger operation. Regardless, if merchants and businesses want to ensure seamless and smooth operation with happy and pleased customers, then innovating and staying on trend to their credit card processing and payments should be a must.