The aim of the rapid payment subsector should no longer be to eradicate cash as a means of payment, but to reduce its use in instances where it is avoidable, say the minds behind South Africa's PayShap.
The system is looking to have 5- to 9-million regular users in the country within the next four years with eight partner banks. "It is South Africa’s first interbank, realtime digital payment service and protects account details using technology such as banking apps and cell number payments."
PayShap is available on the Absa Bank, FNB, Standard Bank and Nedbank banking applications, and is securing partnerships with Capitec, Investec, Tyme Bank, Discovery Bank, Sasfin and Standard Chartered.
South African fintech company and online payment service provider Ozow estimates that up to 80% of South Africans have a bank account, but cash still accounts for nearly 40% of transactions. This presents risks, such as vulnerability to criminality, as protecting cash costs the South African market an estimated R23bn.
"Speaking at an event hosted by Ozow in Cape Town on Wednesday, the head of realtime payments at BankservAfrica and manager of PayShap, Mpho Sadiki, said digital payments should complement cash payments if the initiative is to take off in South Africa."
“Cash is not the enemy, cash is the opportunity, and I think that is how we should start looking at it. [It is] the opportunity in the sense that the idea is not to displace cash completely. You can never do that. There are so many cases cash solves that digital payment can't,” said Sadiki.
"There is a misconception that business sectors such as the taxi industry are cash dominant because this aids tax avoidance, but these are cash dominant because the sectors closest to the sector are also cash dominant, he added."
“I think it’s about engagement. It’s about understanding the use cases that drive the usage of cash. You can go to any retailer large or small and they can take you through digital payment. It’s about understanding those use cases,” Sadiki said.
In its Vision 2025 document released in 2018, the Reserve Bank said it had a road map for “building a world-class national payment system (NPS) that serves the economy and people of South Africa”.
“The SARB expects consumers to have increased trust in and familiarity with electronic payment systems by 2025. To attain this vision, industry stakeholders should collaborate to ensure the safety, efficiency, integrity, transparency and accessibility of the NPS,” the document said.
The central bank’s document said consumers would benefit from increased speed and wider availability of electronic payments without compromising the security of their money. This would help to bolster trust and grow usage of electronic payments by South African consumers and businesses, the Bank said.
Cash is not the enemy, cash is the opportunity, and I think that is how we should start looking at it
— Mpho Sadiki, PayShap
“As payment networks extend their reach to geographies and sectors that were previously underserved, more inhabitants will be brought into the digital economy and the standard of living will improve for all South Africans,” the document added.
Mastercard’s South Africa country manager Gabriel Swanepoel said in markets such as Brazil, the digital payment wave was driven by consumers’ need for safe means of holding money other than physical cash. He said a winning formula takes the benefits of cash and digital payments into account.
“What we have found in the formal economy in South Africa is that in many cases there are issues around security, being the country we are. But I think there are other things that come into play.
“People might now want to have a cash flow on hand or they need to pay their distributors quickly, or they need to do other things from a supply chain perspective that might not necessarily cause them to want to accept cash, or they might cause them to just accept digital payments,” said Swanepoel.
In the past two years in South Africa, the informal trade aggregator came in sixth on a list of the top 10 merchants that accept digital payments, Swanepoel added.
Capitec head of card and electric payments Busi Radebe said local security in digital payment is unlikely to differ much the British model.
“For you to participate, the Brits have this concept of an account information service provider and there is a very clear accreditation process for you to be part of that, and there are clear rules and guidelines on what you can do and what you cannot do if you are an account information service provider, for example. One of the key elements is consent,” said Radebe.
The British model allows clients to view data from multiple accounts in one place to manage their money more easily. In the UK, the technology has also been used to establish budgeting applications and websites to compare prices for goods and services.
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