TJ Horan is vice president of FICO’s Product Management. Supplied
TJ Horan is vice president of FICO’s Product Management. Supplied

OPINION: SA’s shift to a cashless environment will impact payment fraud defences

By TJ Horan Time of article published Jan 31, 2019

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Just over a year ago, I wrote on the FICO Blog that “2018 will be the beginning of the end for physical credit cards. 

However, their functionality will become even more omnipresent in our lives as more cards migrate to consumers’ mobile phones.”

In fact, that prediction came true. After some initial hesitance, it’s been interesting to note that more and more South Africans are going digital and adopting mobile payments. The shift to a cashless environment has been largely pushed by the introduction of app-based payment services such as SnapScan, which services over 50 000 merchants across South Africa, and Samsung Pay, recently launched in August 2018.

Mastercard in collaboration with South African mobile payment application – Zapper – also announced in 2018, a new Masterpass digital payment system that allows users to pay for goods and services at over 20,000 merchants across the country using their smartphones.

All of these applications make use of QR code technology to provide seamless all-in-one mobile payments, vouchering, and loyalty services to participating businesses and brands. The advantage for the consumer is that they get to simply swipe up, authenticate, and accept a transaction from their mobile screen without having to log into their actual bank account or enter card details at every instance.
The Next-Level “Wallet Diet”

My 2018 prediction, dubbed “the wallet diet”, was laughed off by many as an impossibility, their own wallets stuffed with cash, cards, receipts and the odd losing lottery ticket. 

A year later, my “high-roller wallet” contains only a couple of physical cards; the functionality of the rest has transferred to my smartphone. Seriously. My wallet headed into 2019 is about 1/10th the size it was at the start of the year.

My 2019 prediction is that my newly trimmer wallet will be even thinner by next December. I’m predicting that I, along with millions of other consumers, will go cashless in 2019.

Anecdotally and empirically, we know that countries like Kenya are nearly cashless. In fact, in Kenya, more than 250 government services are available digitally through the country’s e-government platform, e-Citizen. Over 90% of all digital payments on e-Citizen are made through mobile money.

In Europe, countries like Germany are comparatively card-free (for example, only 36% of Germans over the age of 15 even have a card).

Mobile Transactions Are the Fabric of Life

Here’s why I think consumers worldwide will go cashless in 2019: it’s finally easy enough. I noticed a marked difference in the ease of making mobile transactions in 2018 during my extensive travels for FICO. It’s getting incredibly easy to conduct nearly every everyday transaction with a smartphone in South Africa too:

A car to the airport? Uber or Taxify.

An unexpected Gautrain transfer across Gauteng? Load money into your card using the train service’s transit app.

Need a Hotel? Sites like and Safarinow are well-established for your online bookings and payments.

Stopping by a farmers’ market to catch a slice of life? Most vendors now prefer to accept payment via phone.

In 2019 I predict that mobile transactions will become even more seamless, making for a hockey-stick chart of their adoption.

Once again, I’ll use my own experiences as a yardstick of averageness. For years I’ve had  bankies full of foreign currencies, ready to pick up when I leave for another trip to FICO’s far-flung offices. The thought of landing in a foreign land without cash was just, well, something you didn’t do. I recently ran out of euros and considered whether I’d pick up a new supply as soon as I landed and cleared immigration, my usual routine. But after I deplaned I didn’t even think of it — I rushed out of the airport, in true ’high-roller’ fashion, to cross the street to the train station, dodging cars as I did. And my euro bankie now remains empty.

Will Fewer Cash Transactions Result in More Fraud?

As a larger portion of cash-based transactions (no matter how small) are replaced with digital transactions, the number of opportunities for fraud will naturally increase. I’m not talking about digital credit card transactions where the fraud losses are relatively stable, I’m referring to new payment vehicles that are tied to retail banking accounts.

Consider this: If someone were to steal the cash in my wallet they’d get R100 (maybe R200 on a good day). If they were to steal (or take over) my mobile payment account, the losses would quickly become much worse.

My third 2019 prediction is that fraud losses associated with mobile payment apps will get worse before they get better.

In South Africa (and even in the United States), real-time payments are relatively new, so their fraud defences are simply not as mature as they are in the credit card space. This rapid acceleration towards cashless consumers will stretch existing fraud defence across several dimensions. There’s a lot for us to look forward to when it comes to a convenient, cashless life – but also, lots of work to be done.

TJ Horan is vice president of FICO’s Product Management.


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