Putting the fin into tech

 

 

Innovation and sustainability are the current buzzwords and entrepreneurs in the financial technology (fintech) industry are coming up with new, exciting ideas to solve the problems of their target market.

One such innovation is uKheshe, which provides a payment system targeting informal traders who do not have access to mainstream payment solutions. The company is one of 12 finalists in the 2019 Global Fintech Hackcelerator @ Southern Africa — a South African Reserve Bank and KPMG Matchi initiative — which showcases fintech firms that demonstrate innovative solutions to complex financial challenges.

Co-founder of uKheshe, Clayton Hayward, said the prerequisite to be a merchant who uses tech solutions such as SnapScan or Zapper, or even a point-of-sale terminal from a bank, poses insurmountable challenges for informal traders. These include providing financial statements, such as proof of income, a business plan and proof of residence.

Hayward said informal traders might not have the records of their business activity and, therefore, are by default excluded from receiving digital payments. “They’re limited to cash-only transactions,’’ he says, adding that many subsistence entrepreneurs can double their daily income if they are able to accept digital card payments.

Entrepreneurs start by buying an uKheshe card which has a QR code, at Pick n Pay for R20, or they can get it directly from the company. A QR code is a machine-readable code of an array of black and white squares, typically used for storing URLs or other information that can be read by the camera on a smartphone.


The user can then register the card with their cellphone number and start receiving payments from all the major banks in South Africa.

Hayward said the big benefit is that the uKheshe cardholders do not need a bank account: they access funds via an ewallet. Users dial *120*82274# and follow USSD prompts to view their balance and can withdraw the money at any Pick n Pay till nationwide. The company started doing business in November last year; so far it has 275 000 clients.

Co-Pierre Georg, an associate professor at the University of Cape Town’s African Institute of Financial Markets and Risk Management, told the Mail & Guardian that fintech will shape the financial services industry in the next decade or two.

“There is not a single function within a bank or money market fund that won’t be affected by fintech. From payments to underwriting to compliance, in all areas of financial services we now see fintech companies successfully compete with industry incumbents,” he said.

Georg said many South African innovations have tackled the issue of remittances, that is, cross-border payments by migrants.

“South African remittance companies are recognised internationally and have seen solid growth over the past years. This sets us slightly apart from the United Kingdom or Europe where there is more of a focus on artificial intelligence startups,” Georg said.

Paycode is another South African fintech company in the Hackcelerater finals. It facilitates payments and helps to store electronic data.

The company, established in 2014, operates in Ghana, Zambia, Nigeria, Mozambique, Guinea, Botswana and Namibia. It doesn’t currently operate in South Africa because of the previous presence of Net1, a universal electronic payment system that handled the payment of social grants in the country.

Paycode partners with governments, nongovernmental organisations and financial institutions, enabling them to make payments to recipients. The company’s goal is to “financially include the 590-million deep rural and urban population in Africa who have up to now been unbanked,” said Grant Haarhoff, chief financial officer at the company.

Haarhoff said the slow rate of infrastructure development in many African countries had left a large proportion of the continent unbanked. That’s what inspired the idea for Paycode.

Recipients receive a Paycode card that is registered with the user’s personal data. The cards are biometric secured, allowing individuals to use a fingerprint to withdraw money from point of sale devices close to where they live, provided for by Paycode.

Haarhoff said Paycode already has 3.4-million registered users, with a five-year target of 100-million.

“We are taking affordable, secure financial services to the people under the mango tree, without the need for physical branch structures or data connectivity,” he said.

Although innovations such as these are transformative, there is more that can still be done, according to Georg. He said to support fintech the Reserve Bank and the government need to implement a token-based central bank digital currency.

He said the sector needs this infrastructure to develop new and innovative products. Georg says once a product is developed in one country, it can easily scale globally. “We have a unique opportunity in South Africa to become world leaders in this field and we need a sense of urgency among our policy makers,” he added.

The 12 Hackcelerator finalists will participate in a demo day on October 29 to strut their stuff to the judges, who will adjudicate two winning innovations. The winning companies will have the chance to attend the 2019 Singapore Fintech Festival.

Tshegofatso Mathe is an Adamela Trust business reporter at the M&G

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Tshegofatso Mathe
Tshegofatso Mathe is a financial trainee journalist at the Mail & Guardian

Related stories

As opposition mounts, Zimbabwe’s president lashes out

Emmerson Mnangagwa has accused ‘dark forces’ of destabilising the country

Big retailers need to step up to the plate

To stave off a multi-generational malnutrition crisis, the food industry must work with government to provide highly nutritious foods at cost during the pandemic

Crime stats mark a bitter start to Women’s Month

We must celebrate women’s achievements this month while agitating for structural change, argues Luke Waltham

South Africa prioritises fossil fuels over clean energy in post-Covid-19 recovery packages

The country is among the G20 countries who have invested in electricity produced from coal, oil and gas at the cost of addressing climate change

Challenges and opportunities for telemedicine in Africa

Telemedicine in Africa is currently limited by the availability of basic infrastructure, but, considering the lack of doctors in rural areas, it is a vital component in addressing the continent’s healthcare needs

Fight the disease of corruption in the same way we fight the coronavirus

Gogo Dlamini, Themba Dlamini’s mother, died of Covid-19, but Mzanzi has a chance to rid the country of fraud and exploitation and instead serve ‘Gogo Dlamini’, the people of South Africa
Advertising

The PPE scandal that the Treasury hasn’t touched

Many government officials have been talking tough about dealing with rampant corruption in PPE procurement but the majority won't even release names of who has benefited from the R10-billion spend

ANC still at odds over how to tackle leaders facing...

The ANC’s top six has been mandated to work closely with its integrity committee to tackle claims of corruption against senior party members
Advertising

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday