Nedbank PayShap, hot air, or viable payment solution?

Nedbank recently launched PayShap, a rapid payment system with a bold pricing strategy designed to drive widespread adoption.

Smooth intro for Nedbank for their new PayShap system launched alongside SA’s three major banks, First National Bank, Absa, and Standard Bank.

Nedbank says the system is free until April 30, 2023, with a rand fee charged thereafter, making the green bank a little more appealing than the rest.

More banks are expected to go live with the system in the coming months, which is the major reason the system caught our attention.

The system forms part of the South African Reserve Banks’ vision 2025, a plan to modernize payment systems in the market.

PayShap allows South African bank account holders from the four major banks to receive and pay money instantly between banks.

The plan is to hopefully introduce those without banks to a simpler system which allows transactions without the need for bank account details.

Users will use their mobile numbers or e-mail address to register, but the system is rather tedious for hopes that it can convince the bank-less South African to join.

Requirements

Your cellphone number will be used as your ShapID, once a client changes their ShapID, or loses their number, Nedbank will register a new ShapID.

Before using PayShap, users must register for the service with a unique ShapID via online banking, cellphone banking or money app.

The ShapID must be linked to a user Nedbank account.

The feature makes transactions instant for those who don’t already know, which means reversing payments or cancelling them may require added effort.

Nedbank says reversing payments or cancelling payments is possible by contacting your bank who will then following industry processes will to try and recover the funds made in error.

To register using cellphone banking dial *120*001# and follow the PayShap menu steps.

Users can also log on to their money app or online banking, select more and go to settings to register.

Toggle to profile settings then ShapID management and register a ShapID.  Read terms and conditions and select the account you would like to link PayShap to.  Register and Bob is someone’s uncle, but you get the picture.

The challenge

No one’s teaching the unbanked citizens digital literacy, and expecting them to catch on to a new smart payment system is a tad bit of a stretch, which most likely may translate into slow growth.

While the system makes life a little easier with the recipient only sharing their ShapID for transactions, the pricing does seem a little steep.

Fee structures per transaction are dependent on the amount sent.

For example, banks could argue that all fee transactions under R 100 are free, and charge between R6 and R8 for transaction values between R 200 and R 1000 depending on the user’s bank.

This could work out to be more than a standard EFT which averages around R9, R10 and R15.

While the launch fee for Nedbank could arguably be the best of all banks, cumulative costs between banks could work out slightly higher which trumps motivation for the service.

Digital literacy

The migration into a semi cash digital future means banks should consider the carrot used to reel new clients in. It has to add up and actually be better on the pocket short term and even term.

Financial inclusion is the ultimate goal for banks we presume, and doing so will require better planning.

A positive move for Nedbank, which holds the belief that technology has a vital role to play in helping South African’s transact more easily, safely and more cost-effectively.

Nedbank’s Managing executive in solution and innovation, Dayalan Govender says: “We are pricing PayShap aggressively because we strongly believe that it is an innovation with enormous potential to help more South Africans join the digital economy.

“By enabling individuals and small businesses to make instant payments cost-effectively using their mobile phones, PayShap offers the security of digital transacting with the immediacy of cash,” says Govender.

PayShap will initially handle transactions up to R 3000.

Yes, there may be a few tweaks here and there for all banks to consider regarding payments systems intended to minimize cash usage but we think PayShap is a spirited addition to the Nedbank ecosystem and a noble bend into the digital future.

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