The payments industry has seen an encouraging increase in opportunities for merchants to capitalise on. This has been evidenced by an average transaction value of slightly less than R3 000 per user in the South African digital commerce market for 2018 and estimates that the global market will grow at 13.9 percent through 2022. But to do so, merchants require access to secure, efficient, and user-friendly payment systems.
According to the World Payments Report 2018 from Capgemini and BNP Paribas, developing markets are driving the boom in digital payments. It is estimated that by 2021, these markets will account for half of all non-cash transactions worldwide. Considering that approximately 90 percent of South African informal enterprises run as cash-only businesses, there is some work still to be done.
Even though there is strong customer interest to pay by card, a Mastercard study has found that many local small traders are not offering card or mobile acceptance. The study cites the perceived costs of accepting these digital payment solutions, a lack of banking facilities, and a lack of knowledge about alternative payment solutions as the main reasons for this lag in adoption.
Much like the promise of the paperless office, the cashless economy is viewed by many as a pipedream. Yet, there is substantial evidence that this pipedream will actually come to fruition. According to a UN article, more than 500 million Africans currently use mobile phones, with 84 million having active mobile money accounts. Part of the attraction of mobile money solutions (especially as payment forms) is that they are generally easy to use, and funds are cleared immediately, often bypassing the need for a bank or other financial institution.
Needless to say, merchants (whether online or brick-and-mortar-based) are looking for more effective ways of empowering their customers in this digital and mobile-led world. Up to a few years ago, inter-bank payments were cumbersome to do and the long clearance time before funds were available limited sales.
But thanks to the arrival of alternative payment environments like i-Pay, processing times have dropped to seconds (instead of minutes), funds are immediately available, and customer drop-offs have decreased significantly.
Digital gateways like i-Pay are democratising ecommerce and laying the foundation for a cashless environment that will not only be reliant on the adoption of mobile money solutions. Instead, all these various offerings combine to present consumers and merchants with options beyond the traditional, opening up new customers bases for merchants and giving cardless consumers access to online channels they previously couldn’t purchase from. For instance, i-Pay customers in the food delivery vertical are seeing average monthly growth of 53% in i-Pay transactions and sports betting providers average monthly growth of 10% over 2 years. Current forecasts predict that between 15-20% of online purchases in 2018 will be fulfilled via i-Pay or similar services.
This is not to say that adoption won’t be without its challenges. Much work still needs to be done on merchant education and increasing awareness from consumers on Instant EFT options. However, the increased security these provide, not to mention how transactions are completed virtually instantaneously with no need to send a proof of payment, make for compelling reasons to embrace it more wholeheartedly.
Given the complexities of the regulatory environment, especially when it comes to the storing of sensitive personal information (like bank account details), a solution like i-Pay does not keep any of the financial information. It merely acts as a gateway to deliver payments more efficiently. With this in mind, merchants can sell more products and consumers are not as reliant on cash or cards as before.
We are entering exciting times for digital payments and i-Pay is more than ready (and able) to capitalise on these opportunities.