A South African Reserve Bank study has highlighted several key reasons why the country’s consumers remain wary of digital payment methods.
The SARB’s September Payments Study Report found that of the more than 7 000 South Africans surveyed across two surveys, 17% were concerned about entrusting their limited funds to electronic payment methods.
Some 9% of respondents felt online payments robbed them of control. Others indicated their concerns about security breaches or were not interested in technology.
Most respondents (19%) cited their need for knowledge to avoid digital payments.
The last point is significant.
A solution like PayShap, for example, is still in its infancy in South Africa. While many mobile banking apps now offer this option for functionality that enables instantaneous payments between different banks, people tend to tread lightly when they see it pop up on their screens. “Not knowing” is a great deterrent.
However, as Bob Group MD Andy Higgins points out, the more people come to understand the technology, the more they will embrace it.
“Consumer education campaigns will, in time, help users understand and trust these new payment methods. This will be aided by incorporating user-friendly features like QR code scanning, mobile app integration and ‘Request to Pay’ functionalities,” he says.
“Furthermore, due to the lower cost of these payment methods, savings should be passed on to the consumer.”
Card payments remain South Africans’ most popular online payment method (70%, according to the SARB study). As millions of crime-conscious citizens now loathe to carry cash, debit cards have found considerable favour due to their convenience.
There are certainly advantages to making card payments. If, for example, shoppers pay for an item online and do not receive their order, they can contact their bank to have the payment reversed.
The downside for merchants is that card payments are more expensive and carry higher risks for possible chargebacks. It is one of the reasons why online marketplaces like Bob Shop offer options like PayShap pay by proxy.
PayShap pay by proxy requires the paying user to enter a unique payment reference (proxy) to make a payment without entering bank details. These payments are reflected immediately, allowing merchants to fulfil the order as soon as the payment has been made.
Buyers will receive a notification on their mobile banking app once PayShap Request to Pay becomes available in the new year. They can then approve or reject the payment without entering any banking details.
As much as these technologies create an even greater convenience for online shoppers, Higgins is not oblivious that cybercriminals are always on the prowl. Irrespective of the payment method, consumers should always ensure the merchant they are dealing with is legitimate. This can be achieved by:
- Checking the URL. Users may click through from a link in an email, SMS or online advertisement believing they will land on a particular website, but instead, it is a clone of the website.
- Ensure the site has HTTPS encryption. Shoppers should look for trust indicators, such as secure payment gateways or certification seals (e.g., PCI DSS compliance).
- Be extra vigilant when paying on websites that are not based in South Africa. Users generally have fewer protections and recourse for action should something go wrong.
In summary, Higgins recommends that when consumers decide on a payment method, they should look at factors like convenience, whether the technique offers encryption and fraud protection, and whether there are potential hidden fees like credit card foreign transaction fees.