If we assume that most users paid via credit or debit card when shopping online, the cost of doing business in South Africa is remarkably high. Photo: Pixabay
JOHANNESBURG -  By 7am on Black Friday 2019, Superbalist had nearly 20 000 orders on its site – only a fraction of the total transactions completed over the entire weekend leading up to Cyber Monday – costing over R10 000* in in payment processing fees. 

For sister company Takealot, which expected to ship an order per second during its Blue Dot Sale, that figure would have been exponentially more. 

If we assume that most users paid via credit or debit card when shopping online, the cost of doing business in South Africa is remarkably high. 

The average cost per transaction on a credit card purchase is 2.9%. While the Payments Association of South Africa (PASA) grapples with ways to modernise our national payment system to make processes more efficient and flexible, merchants have a chance to lead the way by integrating a payment solution that will cost them only 1% per transaction: cryptocurrency.  

Black Friday 2019 saw over 7 million transactions (in-store and online) being processed through BankServAfrica, the company reported. This amounted to a total spend of R6 billion, a massive jump from 2018’s total spend of R2.9 billion. Of those however, only 534 828** were online transactions meaning that the vast majority of South Africans are still shopping in-store for their Black Friday bonanzas. According to Peter Harvey, MD of the DPO Group – Southern Africa, which comprises of payments solutions PayGate, PayFast and SiD Secure EFT,  “It is clear that Black Friday and Cyber Monday are here to stay. South African shoppers have embraced the event and have planned well in advance this year. The buying patterns also show us that we are dealing with a more mature consumer.” 

These are consumers primed for online shopping. Think multiple screens. Items bookmarked and wishlist-ed in advance. Without the limitations of a physical store or business hours, merchants stand to make a lot more money and consumers are able to shop and pay from the comfort of their couches. 

Driving digital financial inclusion in the coming decade is the key to unlocking improved economic growth. So what can a cryptocurrency payment solution do for merchants aside from drastically reducing their processing fees for card-not-present online transactions? 

Cryptocurrencies like Bitcoin and Ethereum enable faster, safer transactions with instant settlement and no chargebacks. Not to mention the possibilities for global, or at least continental, expansion if you’re an online retailer. The practicality of digital currencies has no limitations. Once the infrastructure is in place, merchants can enable cross-border payments and introduce multi-currency operations. 

Basically the more merchants adopt crypto, the more people will use it, and the more people use it, the more ubiquitous crypto payment solutions will become. 

Jan Pilbauer, Chief Payments and Innovation Officer at BankservAfrica remarked in his comments on the company’s Black Friday/Cyber Monday report “If just 10% of the cash transactions in the market are captured, R450 billion would be brought into the formal banking sector and this value could drive further benefits to the end user and improve financial inclusion.”

The same could be said for crypto – if we bring a percentage of cash and card users into the market, we improve South Africa’s payments infrastructure, spur economic growth and make e-commerce a lucrative and accessible business opportunity. For a country in desperate need of innovation, integrating a crypto payment solution ahead of the demand curve might be exactly the spark we’ve been looking for. Cryptocurrencies have the ability to be a catalyst for growth for the South African economy – if we choose to view them that way. Right now, online merchants are on the forefront of this change and stand to benefit the most. So what will it be: cash, card, or crypto? 

* Based on PayGate’s premium tier that bills R0.50 per transaction and 0.25% per successful transaction capped at R2,50. 

**The volumes shown for online sales do not account for transactions that shoppers may have done that did not require a one-time pin. These transactions are accounted for in the total transaction volumes.

Tish Haridass is the Marketing Manager at Coindirect 

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