South Africa’s cashless future relies on localisation, not innovation

Mobile wallet

The recent article by Memeburn senior reporter Stuart Thomas titled ‘Don’t burn your wallet: why SA hasn’t reached its mobile, cashless future (yet)’ gave terrific insight into one of South Africa’s most exciting technology sectors. I would like to add to the discourse by providing some additional insight as a mobile transacting platform provider to our country’s largest retailers.

Global context

South Africa’s perceived ‘failure to launch’ in respect to mobile money needs to be put into a global context. In the latest MasterCard Mobile Payments Readiness Index, only four countries – Singapore, Canada, the US and Kenya – score higher than 40 out of a possible 100. The inflection point, according to the report, sits at 60, highlighting the fact that in most cases mobile payments has been a solution looking for a problem.

This is rapidly changing as each market delves deeper into the specific uses and benefits their population is looking for. As Vodacom’s Herman Singh rightly points out, there were too many people with too many tech propositions — and no one who asked what the customer wanted.

South Africa may not be at the head of the global mobile payments race but there is a swathe of hugely exciting mobile transacting applications and services being launched right now. The success of these applications will rely largely on the service providers’ ability to localise each service to suit the specific needs of the South African population. As Singh goes on to state, “What worked in the rest of the world won’t work here.”

Cut and paste copies of services that were successful elsewhere in the world simply won’t succeed. Roleplayers must therefore be wary of relaunching old tech with just a lick of new paint. If the country’s mobile transacting industry is to thrive, we need to apply new thinking. Mobile money simply can’t be in South Africa what it is in Kenya. Our banking sector is too sophisticated, too established.

Transformative technology

However, the potential for mobile money to transform our banking sector is even greater here than it was in Kenya. South African consumers are gripped in the deadlock of the Big Five (Absa, Nedbank. FNB, Standard Bank and Capitec) that offer largely similar products at largely similar prices (with the exception of Capitec, which focuses on the lower end of the market, albeit with a similar mindset of customer lock-in). As a result, South African consumers suffer some of the highest banking charges of any developing nation.

Mobile money services, such as MTN’s Mobile Money, stand to disrupt this entrenched sector by offering banking services at a fraction of the cost of traditional banks. By integrating with retailers’ points-of-sale, these services can tap into the massive national footprint of our bigger retailers, largely eliminating the need for ATMs and bank branches. By saving on physical infrastructure, mobile money services can offer transactional fees at a fraction of the cost of traditional banks.

Leveling the playing field

The retail point-of-sale integration is key: by adopting a platform that sits on top of retailers’ points-of-sale systems and enables any kind of mobile payment or transacting solution, it levels the playing field and leaves roleplayers — banks, retailers, brands, agencies, MNOs — to focus on developing innovative customer-facing applications and solutions. The focus shifts away from who owns the tech and onto who uses it to best effect. The benefit? Better apps that deliver more value to the people that truly matter – the consumer.

Local innovators must also be very aware of the fact that the world’s largest and most innovative tech companies are turning mobile payments into their next key focus. Apple, Google and Facebook have made their intentions clear: they are entering the mobile payments space purely to emerge as victors in what stands to be the single largest overhaul of how the world purchases products since the advent of the credit card.

The younger generation are also unequivocal about it: In the US, a recent Viacom study of 10,000 millennials showed that three-quarters of those surveyed are more interested in banking services from the likes of Apple and Google than those from their own banks. Is it unrealistic to claim that the mobile phone will be the preferred payment device for the generation now entering the workforce en masse?

Finally, mass market awareness

In this regard, the recent mass market launch of SnapScan is indeed encouraging. The support of a large corporate entity lends the service a measure of credibility that can only be of benefit to the rest the industry. Our customers and partners often highlight the need for a mass consumer-level education and awareness campaign around mobile transacting as the most pressing priority for the industry right now. Standard Bank’s partnership with SnapScan bodes well: surely the big enterprises are feeling confident that South African consumers want to – and will – use their phones as a payment mechanism.

This new generation of mobile payment solutions learned a lot from those that came before them, and we’ll see even more learnings applied in future payment technology. QR codes will likely feature heavily, but expect to see today’s payment solutions mature to the point where opportunities for exploiting these codes are reduced. All you really need in order to manipulate a QR code is a black marker and your own registered QR code, so look out for new, more secure and efficient solutions that put ownership of these codes in the hands of consumers — generating unique codes for each and every transaction for example – reducing the potential for fraud.

Whatever shape, form or colour the new generation of mobile payment solutions take, one thing is clear: for those that emerge as winners, the rewards will be infinite. And while it might not be time to burn your wallet yet, it might be a good idea to get the matches ready.

Image: nestor panelo via Flickr.



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