A payments revolution, but not the one we expected

IN the past month, South Africa’s biggest telecommunications operators, Vodacom and MTN, abandoned their mobile money services in the country.

Almost simultaneously, FNB announced record sign-ons to its eWallet service. And this week, Mastercard announced new global initiatives for its Masterpass mobile wallet, launched in South Africa through Absa two years ago.

Clearly, the country is undergoing a payments revolution, but not the one the telecommunications sector thought it was leading. Ironically, it is now being driven by financial services organisations rather than the telcos that many believed would eventually supplant the banks.

The Masterpass app is a powerful weapon in the war for relevance; it is one of the first that can be linked to a credit card as well as debit and cheque cards. With debit cards in use by almost half South Africa’s population, it offers digital financial inclusion on a scale never possible before.

Ironically, one of the Masterpass success stories has been its integration with the Vodacom customer app, one of the most widely used mobile apps in South Africa outside social media and instant messaging. The Vodacom rollout was just one of a range of implementations showcased at the Mastercard Innovation Forum in Budapest, Hungary, this week, amid demonstrations of payment robots and artificial intelligence.

“It is a great proof point of how, in a dual economy like South Africa, airtime purchases and other use cases can be fulfilled through digital payments,” said Mark Elliott, division president for Mastercard South Africa.

He also announced that Ekurhuleni would now allow its 900 000 ratepayers to pay municipal bills with Masterpass on their smartphones. They scan a QR code on their account — either on paper or a computer screen — and enter an ATM pin code or a one-time pin to authorise payment.

“It’s a world first for a municipality accepting bill payments via a digital wallet of this kind,” said Elliott. “Ratepayers no longer need to carry cash and stand in long queues or log into internet banking each time they want to pay their account.”

He acknowledged that Ekurhuleni was “low-hanging fruit” due to the ease of integration of Masterpass with accounts and the readiness of ratepayers to use it.

“But it is clearly solving a customer pain point, and represents an opportunity to scale new payment services for a broader market.”

Another South African example showcased at the Innovation Forum, the iKhokha mobile point-of-sale device, is in use by 3 000 merchants in the health and beauty sector locally. A shopper opens the Masterpass app on a smartphone, scans a QR code generated on the iKhokha device, and completes the transaction with one of a range of authentication methods.

“The customer puts a pin number in a mobile device in such a way that it mimics a secure credit card, and the pin prompt allows debit cards to work online in South Africa,” Elliott said.

“We believe it’s a breakthrough because everyday purchases are done with debit cards but they have not been used in the e-commerce environment internationally. There is clearly a lot we need to do around education to take users further on the digital payments journey, but the journey has begun.”

Goldstuck is the founder of World Wide Worx and editor-inchief of Gadget.co.za. Follow him on Twitter and Instagram @art2gee