SA Retailers Missing Out On New Payment Trends
Merchants, retailers and the government are missing out on their share of the R14bn local online retail market, partly because they’re not cashing in on alternative digital payment technologies.
According to World Wide Worx’s Online Retail inSouth Africa 2019 study, released in November 2018, local online retail went mainstream in 2018, and was expected to surpass the R14bn sales mark by year end. More than that, the 2018 figure represented 25% growth over 2017 and some individual merchants saw growth rates of 50%. This is not a market anyone can afford to ignore, and alternative payments offer an easy way to increase participation in the digital economy.
Certain alternative digital payments, such as i-Pay’s instant EFT payment solution, enable any bank account holder to pay in an easy and convenient way. They do not have to stop their online shopping to make a manual EFT, and they do not have to have a debit or credit card. The merchant gets instant notification that an irrevocable payment has been made, and doesn’t have to wait for the money to appear in their bank account before shipping the goods.
More traditional digital payment technologies – such as debit and credit cards – still exclude the millions of South Africans that have only an ATM card. Alternative digital payment solutions extend the benefits of digital payments such as convenient access to online merchants and speedy delivery – to these“cardless” consumers, and in
the process open up whole new markets for merchants. An indication of this trend is that during both Black Friday and Cyber Monday 2018, merchants reported increased transaction volumes, yet lower transaction values per individual transaction.
Consumers who did not traditionally have access to online shopping joined the throngs in 2018, because alternative payment technologies gave them access to discounts they could not take advantage of before.
For merchants there are a number of benefits to using alternative digital payment solutions instead of traditional credit card payment systems. Forexample, the real-time confirmation of payment means they can execute the order immediately, and do not have to delay shipping while awaiting payment. This also means that there is less chance of an order being set aside and inadvertently not filled.
Their customers are also happier because they receive their purchases more quickly.
The South African Government should also start to focus on new payment trends. Not only merchants, but also local, provincial and national governments can benefit from alternative digital payment solutions. It is expected that – given how accessible and easy it is to use – alternative digital payments will grow in popularity.
Keep in mind that the hyper-connected millennial generation access virtually anything they want from their mobile devices. They expect real-time results whether this comes from their streaming service, online shopping, or even government services like ID and passport applications. According to the World Payments Report 2018 by Capgemini and BNP Paribas, high levels of non-cash transactions can provide benefits to society in general.
The research suggests non-cash payments address even challenging issues such as corruption because “non-cash transactions share a positive linear correlation with the corruption perception index”. In other words, fewer cash transactions mean lower perceptions of corruption.
Statista estimates that in 2019, there will be 21,5-million online shoppers in South Africa. That means just under 40% of South Africa’s current population of 57,73 million (according to Stats SA, June 2018) will be purchasing online.
Recent research by iab on the South African e-commerce market found that offline shoppers who are contemplating starting to shop online are most comfortable with making bill payments as their first online transaction. This is a perfect opportunity for local governments, for instance, to offer an alternative digital payment gateway to citizens, and make it easier for people to pay municipal and utility bills.
Ultimately, alternative digital payment solutions constitute a huge, but as yet underutilised, opportunity for merchants and local governments to offer their customers and citizens a simpler way to pay for what they already purchase.
Article By IT-Online SA.