New payment tech a boon for small businesses
South Africa’s big four banks have recently launched and announced systems that allow entrepreneurs and small businesses to accept card payments —even without fixed premises and while on the move.
It’s been a long time coming and follows several false starts. Much -fanfare was made of a mobile -technology called Near Field Communication (NFC), a set of standards for smartphones that would enable them to make cashless transactions simply by tapping them against readers located in shops and on public transport, for instance.
While several successful projects are running around the world, it soon became clear that despite the technology being available on most of the latest smartphones, it’s not a panacea for payments where local conditions tend to call for local or tailored solutions.
First out of the blocks with a mobile point-of-sale (POS) system last year was Nedbank with its PocketPOS reader that attaches to smartphones. Since then, Standard Bank has launched a locally developed mobile payment system called SnapScan.
Absa is set to roll out its Payment Pebble system, also locally developed, while First National Bank (FNB) will launch a service using a technology called mPowa in “the next few months”.
“The appetite for mobile payment technology, particularly for smaller businesses, is strong,” says Vuyo Mpako, head of innovation and channel design at Standard Bank.
Launched in May, the bank’s SnapScan service now has 8 000 merchants and more than 32 000 users a month.
“The payment cards that consu-mers have are essentially ‘dumb’ devices,” he says. “All the payment complexity (and much of the cost) rests with the POS systems merchants need to process card payments.
“Merchants need a phone line, POS terminal, there’s a lot of paperwork and processing — stuff that’s beyond the means and inclination of small business owners. Merchants who use SnapScan are charged a flat 3% of the purchase.”
But what about using electronic funds transfer (EFT) through a smartphone’s web browser to do transactions? “Friction,” says Mpako.
“That just introduces complexity into the process of doing business. With SnapScan consumers from any bank download the app and enter their credit card or cheque card number, which is stored on the device securely.
“They only have to do this once, then they’re set to go. Merchants that use the system have a QR code that consumers run their smartphone over to scan it. The price is entered and the transaction takes place. Once it’s successful the -merchant gets a confirmation message — it’s that simple.”
Mpako says SnapScan was developed in conjunction with a Stellenbosch start-up, FireID, as a partnership that marries the bank’s financial know-how with tech savvy that keeps up with the speed of change in the industry.
He adds that more than 40% of transactions handled by SnapScan are not from Standard Bank and that merchants don’t have to have a bank account to use the system — payments can take the form of Instant Money vouchers, redeemable at the bank’s ATMs and Spar supermarkets.
Walk into any Apple iStore and on the shelves you’ll see Nedbank’s compact card reader that connects to smartphones through Bluetooth. PocketPOS lets businesses of all sizes process debit and credit card transactions using a smartphone connected to it.
The device costs between R2 000 and about R3 000, depending on whether the merchant is a Nedbank client and fees are 3.5% of the transaction for clients and 4% for non-clients.
The bank’s managing executive of card payments, Sydney Gericke, says the system is suitable for any business that wants to accept card payments securely without access to a fixed data or telephone line or where low frequency of card acceptance does not warrant the higher rental cost of a traditional POS device.
“It allows many smaller businesses to accept card payments where previously this would not have been considered feasible. It gives businesses on the move, such as plumbers, electricians or delivery services, the ability to reduce cash acceptance when making sales and processing payments on the road.”
Absa’s Payment Pebble is a device that plugs into the audio jack of smartphones and tablets, turning them into secure mobile payment devices. Its touch-screen PIN-entry method is so secure, it’s now with industry regulators to be considered as a new global standard, says Arrie Rautenbach, the company’s head of retail banking in Africa.
“Marketplace merchants and roadside craft market vendors, for example, can accept card payments for a fee of R50 a month for the first year and as low as R20 a month thereafter. All they need is a -compatible smartphone with an internet connection — and it’s -available to all merchants, even those who don’t bank with Absa.”
He says the system reduces the risk of cash handling for consumers and merchants and GPS integration provides valuable business data, such as the time and location of transactions, to merchants.
Also imminent is FNB’s mobile payment system. The bank has signed a deal with UK firm Powa Technologies Group to offer its mobile payment device in South Africa.
Says Alan Scoular, FNB’s chief executive of merchant services: “The mPowa technology works by using a free mobile phone app and a reader that connects to a smartphone or mobile device by plugging into its headphone socket or connecting through Bluetooth. It enables companies and individuals to accept card payments from their customers on the go, in a quick and convenient way. The mobile app is free to download on iPhone, iPad, Android, Windows and Blackberry devices and functions as the control centre that accepts the payment.
“We are in the final stages of -certification and design and will be active with the product in the -coming months,” says Scoular.
Tech and telecoms analyst Arthur Goldstuck, managing director of World Wide Worx, says mobile payment systems bring electronic sales within reach of smaller businesses.
“It’s a technology whose time has arrived but we’re just at the beginning of the adoption curve. About five to six million South Africans bank through the internet, so the concept of moving funds around online is well established. New payment services offer a compelling case for smaller businesses moving beyond cash and EFT to process payments.”
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