Is this the end of credit card pay­ments?

French-born en­tre­pre­neur Thomas Pays’ EFT pay­ment so­lu­tion i-Pay of­fers a cost-ef­fec­tive, safe and user-friendly al­ter­na­tive to credit cards.

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con­sid­er­ing the evo­lu­tion of pay­ments from cash, to cheque books, to credit cards and now e-wal­let op­tions, it is pos­si­ble that in the near fu­ture, more and more peo­ple will make pay­ments di­rectly from their on­line bank ac­counts. This is ac­cord­ing to Thomas Pays, founder of in­no­va­tion tech busi­ness i-Pay Pay­ments So­lu­tions.

This cash­less pay­ment ser­vice en­ables South Africans to make EFT pay­ments when shop­ping on­line. i-Pay aims to of­fer one-step pay­ments from any­where, us­ing a mo­bile de­vice such as a smart­phone, lap­top or tablet, says Pays. There are plans to in­tro­duce EFT pay­ments us­ing i-Pay at phys­i­cal points of sale within the next six months. This will work sim­i­larly to Ap­ple Pay in the US, which uses scan­ning to make pay­ments.

Pays be­lieves in the next ten years, there won’t be as many cash and credit card pay­ments as there are now. “The mind­set of the con­sumer is chang­ing to­wards con­ve­nience.”

The in­no­va­tion came about “by ac­ci­dent”, while Pays’ dig­i­tal agency, Just Per­fect Dig­i­tal, was de­vel­op­ing an e-com­merce plat­form for users in the African mar­ket to cre­ate an on­line store with ac­cess to pay­ments.

Af­ter re­al­is­ing credit card pay­ments pre­sented a fraud risk, Pays says that EFT pay­ments pre­sented a bet­ter op­por­tu­nity for the plat­form.

Pays’ team de­cided to put the e-com­merce plat­form idea on hold when they saw the po­ten­tial of de­vel­op­ing the pay­ment so­lu­tion. “With i-Pay, there is so much po­ten­tial for growth that it is al­most in­fi­nite what you can do in the next five to 10 years with it,” says Pays.

i-Pay is dif­fer­ent to credit card pay­ments in that it is cost ef­fec­tive. Pur­chase fees are a third lower than credit card charges, says Pays. Pur­chases are also quicker and user-friendly.

i-Pay au­to­mates the EFT trans­ac­tion process; when mak­ing a pur­chase on­line, the client can se­lect the i-Pay pay­ment op­tion. There­after, they will have ac­cess to their on­line bank­ing pro­file ac­count, once en­ter­ing their user­name and pass­word. They can choose to pay from their credit, cheque, sav­ings or busi­ness ac­counts.

Hu­man er­ror is avoided as i-Pay au­to­mat­i­cally en­ters the ac­count num­ber, the mer­chant’s de­tails and the amount to be paid. The pay­ment is con­cluded by en­ter­ing the one-time pass­word or us­ing the push ser­vice. This makes the process quicker for the client as it can take up to 15 sec­onds, says Pays. The mer­chant will be no­ti­fied if the pay­ment was suc­cess­ful or de­clined.

There are no ad­di­tional charges for us­ing i-Pay. Clients do not need to regis­ter to use the ser­vice if they bank with one of the five ma­jor banks – Absa, Capitec, FNB, Ned­bank and Stan­dard Bank – which are all in­te­grated with i-Pay. Only mer­chants are re­quired to regis­ter. “One of the rea­sons we have such a high growth is be­cause it is con­ve­nient; there is no bar­rier to en­try,” ex­plains Pays.

The plat­form went live in Novem­ber 2014, and i-Pay now has over 100 reg­is­tered mer­chants. Pays em­pha­sises that their in­ter­est is not to ac­cu­mu­late mer­chants, but rather to con­nect with mer­chants who have a large net­work of clients or users. The com­pany has linked up ser­vices with blue chip com­pa­nies like Sage and Mass­mart, and is cur­rently en­gag­ing with Telkom.

EFT pay­ments have been grow­ing in pop­u­lar­ity among some of i-Pay’s clients. Some clients ex­pe­ri­enced that, where on av­er­age 90% of pay­ments were via credit card and 10% via EFT, EFT pay­ments slowly be­gan to can­ni­balise credit card pay­ments. Within the space of six months, EFT pay­ments have grown to rep­re­sent up to 30% of pay­ments. “We have only just reached the tip of the ice­berg,” he says.

For mer­chants, i-Pay of­fers the ben­e­fit of be­ing cheaper and safer; pay­ments are made di­rectly into the mer­chant’s bank ac­count with­out go­ing through a third party.

Pays says i-Pay has the same revo­lu­tion­ary im­pact credit card pay­ments had when first launched in the late 1980s. The only dif­fer­ence with i-Pay is that the client’s per­sonal de­tails are not shared with the mer­chant and it is cheaper. “We be­lieve we will take the mar­ket of the credit card away over the next five to 10 years,” he says. They feel strongly about this es­pe­cially as i-Pay plans to launch in Europe in the next two to three years. i-Pay will have the op­por­tu­nity to in­te­grate with all the banks when it be­comes law to cre­ate a safer place for clients to re­ceive and make pay­ments, says Pays. The pay­ment so­lu­tion is cur­rently only op­er­at­ing in South Africa but Pays hopes to en­ter the mar­ket in Nige­ria and Kenya by the end of the year. Pays wants i-Pay to be the cen­tral plat­form for banks around the world to be in­te­grated.

Over the past 10 years, Pays has had ex­pe­ri­ence with a num­ber of start-ups such as e-com­merce busi­ness, which grew and was ac­quired by a big­ger busi­ness. He says that an in­no­va­tion is suc­cess­ful if it meets a need and is mar­keted well. He is in­spired by lead­ers of busi­ness tech like Elon Musk and en­tre­pre­neur Justin Dren­nan, who he says is the African equiv­a­lent of Mark Zucker­berg.

“If you know the tech in­dus­try and dig­i­tal in­dus­try in Africa well, you will know there are a lot of in­flu­en­tial and knowl­edge­able en­trepreneurs hid­den in the back­ground. I would like to be like that,” he says.

Some clients ex­pe­ri­enced that, 90%where on av­er­age of pay­ments were via credit 10%card and via EFT, EFT pay­ments slowly be­gan to can­ni­balise credit card pay­ments. Within the space of six months, EFT pay­ments have grown to rep­re­sent up to 30% of pay­ments.

Thomas Pays Founder of i-Pay Pay­ments So­lu­tions

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