Safer, more convenient way to shop online
Cape Town – Don't fear if you’re literally strapped for cash, South Africa is moving towards embracing contactless and virtual forms of payment.
Last Wednesday, First National Bank (FNB) announced it would be launching a virtual credit card for individual and businesses customers, accessible via the FNB or RMB Private banking apps.
FNB’s announcement came shortly after Vodacom announced that it would be developing a new app in partnership with Alipay, a Chinese online payment services provider and a member of the Alibaba Group.
“The main driver for this innovation was to find a solution that provides customers with a safer and more convenient way to shop online,” said Chris Labuschagne, chief executive of FNB Credit Card.
As part of the security features on the card, FNB highlighted a new Card Verification Value (CVV) security number that changes every hour, in order to minimise fraud if the card is stolen.
Instead of receiving a One Time Pin (OTP) to approve e-commerce transactions, customers would instead receive an authentication notice on the app.
“Most merchants in South Africa have enabled contactless functionality in line with Card Payments Associations requirements,” Labuschagne explained.
“FNB is satisfied that most merchants in South Africa are enabled to accept contactless payments, this is further demonstrated by the sharp increase in contactless payments witnessed during the lockdown period.”
The virtual card will be made available to FNB customers in October.
Vodacom Financial Services Executive Nadine Nagooroo said their the new app responds to an increased popularity contactless payments in the wake of the pandemic.
“The new app will definitely support the new normal that we find ourselves in,” Nagooroo said. “Most people want to move away from dealing with cash and there is a trend towards online purchasing – therefore this solution fits quite nicely into that.”
Nagooroo added that extreme due diligence would be applied in protecting customers’ personal data.
“There will be strict adherence to Protection Of Personal Information (POPI) requirements which will be embedded into the system,” she said. “Alipay will not have any access to customer data.”
This is not the first time Vodacom has tried to offer digital money management services. The company launched the M-Pesa money service in 2010 and while it proved successful in other countries such as Kenya, it was discontinued in South Africa in 2016.
“Vodacom M-Pesa is very successful in other markets and will continue to co-exist if we decide to roll this out into the other markets,” Nagooroo explained. “This solution with Alipay is much wider than the M-Pesa proposition as it relates to a lifestyle application. The payment strategy underpins this wider proposition.”
Vodacom is expected to launch the new app in the first quarter of next year.
The pandemic and lockdown has prompted both consumers and businesses to adapt to the availability and accessibility of ecommerce portals.
According to the Covid-19 CEMEA Impact Tracker study published by Visa last month, 64% of South Africans surveyed said the pandemic and lockdown has resulted in them making their first online grocery purchase, while 53% said they had their first online purchase from pharmacies. Five percent of merchants reported they had introduced e-commerce facilities because of the pandemic.
The study also predicted that contactless payments will increase by 30% in the wake of the Covid-19 crisis.
“Contactless payments provide consumers with the confidence to make essential purchases while delivering a consistent and secure payment experience,” said Visa South Africa country manager Aldo Laubscher.
“Consumers who use contactless payment methods for the first time often have security concerns, however merchants are doing a great job in promoting the adoption and use of both contactless and online payments because they have a better-trusted relationship with consumers.”