Local fintech company Payfast is looking to disrupt digital payments in SA by giving local merchants access to its point of sale devices at no cost.
Payments companies such as Payfast are in a race to get as many of their devices into the hands of store owners and merchants.
In the fight to reduce the use of physical cash in the economy, the company, a unit of fintech operator Network International, has decided that giving free devices to merchants, thereby competing on software, is a good way to grow its digital payments business in SA.
Typically, merchants or small business owners looking to accept card and other digital payments have had to buy point-of-sale (POS) devices, commonly referred to as “card machines” at a set price or in some cases paying a rental fee, as well as transaction fees.
Point-of-sale devices from fintech companies Yoco, iKhokha or Flash, and banks such as Capitec, can range in price from about R1,000-R2,000.
Mpho Sadiki, group MD for merchant solutions in Africa at Network International, said Payfast was the first fintech operator to give free devices to merchants.
“The market has been progressively transitioning from legacy rental models to outright purchase. We are the first to take it a step further. We will invest in the actual acceptance terminal on behalf of the merchant and provide it free of charge,” he told Business Day. “We’ve taken that bold step and we believe that’s the right approach, especially for SMEs.”
Small business owners, in particular, have proven to be price sensitive in SA, with many merchants tending to have two or more such machines depending on where they can get the best deal.
Payfast is hoping to entice merchants into using its devices as their primary point-of-sale option.
“We don’t have any rental. The only recurring cost that a merchant incurs is the cost of transactions, plus the cost of data consumption that the terminal will use, which is currently at R49 per month,” said Sadiki.
In years gone by, point-of-sale devices were mainly for accepting card payments. But as technology has advanced, shifting to Android-based operating systems, these card machines are now more like smartphones, with the ability to run a number of software systems and applications. Merchants can now sell digital products such as electricity, airtime and Lotto tickets using these devices.
Payfast and others are now competing on the payments software. Now referred to as Payfast by Network, it is an online payment gateway used by more than 100,000 businesses.
The company became part of Network International when it acquired DPO Group — operators of PayGate, PayFast and SiD Secure EFT — through a $291.3m acquisition in 2021 (R3.5bn at the time).
In 2023, the three DPO companies were consolidated under the Payfast brand, with Network International pumping R500m into the SA platform for expansion.
Sadiki said Payfast’s point-of-sale devices empowered businesses “of all sizes with access to its unified commerce platform to manage their online and in-store operations”. This meant businesses could view their transactions and manage cash flow seamlessly with both online and in-person options.
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