E-commerce has become an everyday necessity for South Africans, writes Jonathan De Matteis, head of sales at Pay@.
Initially, only a niche audience was willing to see past some of the technology’s growing pains, such as purchases being limited to card transactions and the risk of fraud.
The global health pandemic became a catalyst for e-commerce growth in South Africa. FNB reported a surge of 30% in e-commerce activity, offering South Africans a safe haven to buy necessities during lockdown. Banks also addressed consumer concerns by improving online shopping security, such as in-app approvals, and providing alternative payment methods to banking cards.
The result is that today, while card payments still account for over half of the volume, alternative payment methods are on the rise. Payment providers will play a pivotal role in ensuring seamless, secure, and reliable transactions for South Africa’s future digital economy. These platforms invest in infrastructure, security, compliance and offer trustworthy payment options, improving consumer confidence.
From e-commerce to m-commerce
With e-commerce maturing into a key channel for consumers across numerous demographics, 2025 may be the year where we see a transformation of the online shopping landscape. According to Ecommerce.co.za, South Africa’s e-commerce industry will exceed a value of R400-billion before the end of this year, reaching more than 1-billion transactions in 2025.
Mobile commerce, also known as m-commerce, will be a vital driver behind this growth. Considering that eight out of 10 South Africans own a smartphone and 77% of South Africans do their shopping on mobile phones, using our phones as digital shopping catalogues is set to become the majority’s preference. Especially with the reduction in data, and smartphone costs.
Due to these developments, technology experts are predicting that m-commerce will be one of the key trends that defines South Africa’s business landscape in 2025.
The future of SME businesses
At the core of e-commerce and m-commerce adoption is a seamless consumer journey, which includes a hassle-free payment experience. Fintech companies have not only made this possible, but must continually innovate, collaborate, and create the solutions needed to meet future consumer and retailer expectations.
However, we realise the important role that alternative payment solutions in e-commerce and m-commerce transactions will play for South Africa’s small to medium-sized businesses. It will be critical from an economic perspective as well.
The consumer movement towards digital commerce has resulted in 58% of SMEs using digital transactions, states the South African Reserve Bank. For those businesses that haven’t broken into the e-commerce market yet, it will be critical to adopt these payment technologies to meet consumer demand and ensure the survival of their digital and bricks-and-mortar businesses.
There are also various other financial and operational benefits for smaller businesses to jump onto the e-commerce train. Where it could be a challenge for small businesses to qualify for card payments and meet the high costs of card transactions, economies of scale don’t determine e-commerce onboarding as stringently.
This means that payment aggregators are more cashflow-friendly solutions for South Africa’s SMEs.
Choose your payment solution wisely
Looking at the year ahead, there will likely be even more interest from startups and established entities to enter the fintech space. While there are complicated regulations, strict requirements, and onboarding hurdles to comply with first, a more competitive environment will create avenues to further increase inclusivity and foster collaboration.
With a potential increase in choice when it comes to payment providers, it is important that both consumers and businesses ensure they make the right choice to meet their needs. This is because some payment aggregators are more product-driven solutions, where others are customer-driven solutions.
Customer focused platforms, such as Pay@, help clients do better business and help customers experience secure, seamless payment journeys, via technology and partner networks to provide an omnichannel payment solution with a far-reaching footprint.
At Pay@, we’ve seen an increasing number of South African shoppers exploring the e-commerce world, however, we know that many people still rely on cash during this transitional time and shouldn’t be ignored.
Either due to limited digital access or familiarity with financial systems, 73% of South Africans still pay cash at point-of-sale transaction. For this reason, it is critical for us, and other fintechs, to bring together financial inclusion in the era of e-commerce. While it is important leading at the forefront of innovation, there is a need for diverse payment methods, such as cash, vouchers, and direct bank APIs, ensuring that the underbanked are included in a digital focused landscape.
By bridging the gap between traditional and digital finance with flexible payment solutions that provide access to services for all income groups across all tender types, no consumer or business needs to be left behind in South