Now’s the perfect time for SA to tap into power of digital wallets and E-payments
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The global spread of Covid-19 has led to calls for physical distancing and limited interaction between humans. However, there exist instances where avoiding human contact, let alone physical distancing becomes extremely difficult. Hard cash changing hands between a buyer and seller has proven to be the hardest of interactions to avoid.
The use of credit or debit card for payments at store cashier speed points or during withdrawal or deposit of funds using ATM terminals has proven ineffective in mitigating the spread of Covid-19.
Predictions that the scourge of Covid-19 will be with us as part of the new normal calls for innovative permanent solutions.
The use of digital wallets, online and E-payments systems present an opportunity to devise means of living in accordance with the requisites of the new normal brought by the Covid-19.
Making mandatory the use of digital wallets, online and E-payment systems will help humans adhere to the rules of physical distancing and also lead to more efficient ways of doing business.
Digital wallets, online and E-payment systems have diverse benefits or canned externalities that go beyond limiting direct human contact during transactions. Digital wallets and other E-payment systems present both efficient and cheaper options compared to those used in traditional banks.
The rise of E-payment systems in China Technological developments of the 1990s ushered in online markets powered by instant and quick payment systems that gave rise to a new kind of industries. However, these innovative systems still left a huge market share to be handled by traditional banks.
In Kenya, the mobile network operator Safaricom launched M-Pesa mobile money in March 2007. M-Pesa quickly captured a significant market share for cash transfers, and grew to 17 million subscribers by December 2011. M-Pesa has since expanded to Tanzania, Mozambique, DRC, Lesotho, Ghana and South Africa. M-Pesa has become mobile money for the “unbanked masses” turning mobile phones into 24-hour tellers in the entire East African region. However, to this day South Africa continues to lack M-Pesa mobile money services.
In order to take advantage of these technological developments, South Africa needs to make sure that local merchants and industries are able to accept payments from digital wallets and E-payment systems. South Africa cannot risk being left out of a global mobile payments market that is expected to reach $3.3 trillion (R57 trillion) by 2023.
South Africa ought to leverage on its closer relationship to China and partner with Alipay and WeChat Pay as the two giants currently seek to expand outside China. In doing so, South Africa will stand a chance to become part of a machinery run by the E-payments giants.
The greater part of remittance business is today carried out using digital wallets, mobile money and other E-payment systems.
South Africa, as a leading African economy needs, robust legislation that will allow it to stand a chance to seize a sizeable market share of global remittance business.
The initiative would allow the “unbankable” masses to grow the so-called informal sector into manageable businesses.
It would also empower small and medium enterprises as they are more agile and easily adaptable to new innovations than corporate industries.
The new normal brought upon us by Covid-19 could become a catalyst to economic development if inclusive measures and solutions such as digital wallets and E-payment were made accessible to the greater public.
* Paul Tembe is Associate Professor at the Institute of African Studies Zhejiang Normal University, Jinhua, China. He is also based at the Thabo Mbeki African School of Public and International Affairs.
** The views expressed here are not necessarily those of IOL.