|
Related Topics |
|
The rise of digital technology and accessibility has opened a vast amount of doors for South Africa and the make-up of its economy. As such, digital payments have grown to become one of the most important industries in the country.
|
Looking into the future of payments in South Africa
|
The future of payments in South Africa
The sub-Saharan African region is responsible for 45.6% of all global mobile money activity, worth an estimated $26.8 billion transaction value in 2018 alone. Indeed, the continent has seen a growth of 890% since 2011 for its mobile payments industry, with that figure looking to continue to rise going up to 2023 and beyond. When South Africa launched its mobile payments industry, it was considered to be one of the best in the world, according to Deloitte. But, what does the future hold for mobile payments in South Africa?
South Africa understand the need for continuous payments modernization. There are several reasons for these modifications across the board in the financial services industry. Firstly, regulation is necessary to ensure an open playing field allows everyone a fair chance to operate, but too much regulation could become burdensome. The South African National Payment System (NPS) Act 78 of 1998 review means that some non-bank payment bodies could begin performing tasks relegated to banks, such as clearing and settlement of transactions. While there are calls for greater interoperability between payments companies to prevent market fragmentation and to create a better environment for competition; healthy competition has been known to be a proponent of positive change. Customer understanding of how the payments industry works and differs from traditional banking could also help the industry going forwards.
Will markets like these accept digital payments instead of cash in future?
One of the major ways in which the digital payments market will be shaped is based on what customers need from it. Taking payments from digital means has been embraced by many sectors across South Africa. For instance, as Lottoland Pty shows, customers on its online gaming site are able to make and take payments through PayGate, as well as SID Instant EFT. This reflects the popularity of digital payment methods from regular people in South Africa. Customers need to feel that the financial systems in place benefit them and are secure and safe. Greater financial literacy will help remove some of the barriers customers may feel are there.
The main barometer of the success of the digital payments sector would be seeing cash decline. This is not the case, with cash actually rising. There are some people who would always opt for cash depending on their work or their beliefs about traditional finances. But, there are ways in which this can be combatted. The rise in non-banking companies offering banking solutions helps add legitimacy to digital payments and, as retailers are offering their own alternatives, this shows what the future of this industry might look like. It all comes down to the customers. The more they feel they will benefit from digital payments – as some industries currently show – the more they will be likely to fully adopt into the industry and allow it to continue its predicted expansion.
The main barometer of the success of the digital payments sector would be seeing cash decline. This is not the case, with cash actually rising. There are some people who would always opt for cash depending on their work or their beliefs about traditional finances. But, there are ways in which this can be combatted. The rise in non-banking companies offering banking solutions helps add legitimacy to digital payments and, as retailers are offering their own alternatives, this shows what the future of this industry might look like. It all comes down to the customers. The more they feel they will benefit from digital payments – as some industries currently show – the more they will be likely to fully adopt into the industry and allow it to continue its predicted expansion.