Picture: 123RF/Aleksandra Suzi
Picture: 123RF/Aleksandra Suzi

Spot Money has launched SA’s first open banking platform.

Previously called Virgin Money Spot, it has now rebranded to Spot Money after a 2020 acquisition from a local private equity firm.

Open banking refers to a banking platform that is not aligned to a specific bank.

As part of the rebrand, it launched a revised version of the Spot app using Mastercard technology, which allows it to issue virtual and physical prepaid debit cards. The cards are tap-to-pay enabled for contactless payments, and can be ordered through the app.

Andre Hugo, CEO and co-founder of Spot Money, says being bank-neutral means it can partner with a range of financial service providers, bringing a new dimension to the way consumers manage and control their money.

"It’s a marketplace where highly personalised financial services products such as loans and insurance can be coupled with lifestyle services, rewards and digital products, to name a few."

Hugo also says via LinkedIn that before Covid-19 came along, 2020 was going to be the year that kickstarted digital bank transformation; the pandemic just turbo-charged the trend, which forced businesses and people to go digital and cashless overnight.

"E-commerce, home delivery and peer-to-peer payments went through the roof; digital payments became the de facto standard. And it’s not just [for] the tech-savvy or millennials, either: this trend is for everyone."

Spot says it is neither a bank nor a payment app, but both. Hugo emphasises it is not asking people to leave their current banking providers, but as it is an open banking platform users can be multibanked.

"They can therefore link their current bank cards to transfer funds to Spot and use the platform to go about their daily routine earning cashbacks. Our goal is to give ordinary South Africans more control of their finances — to tap into a broad ecosystem of partners without restrictive rules and fees," says Hugo.

After a quick process to comply with the Financial Intelligence Centre Act directly on the app at sign-up, which includes taking selfies, users can create transactional accounts instantly. It also accepts foreign sign-ups via e-mail. Spot is anchored by the banking industry and functions in association with Bidvest Bank.

The Spot mobile transactional account’s key differentiator is that it has no monthly account or card fees, all in-app purchases and payments are free and it issues virtual and physical Mastercard debit cards. It claims to be the first platform to support all quick response code payment types such as Masterpass, SnapScan, wiCode and Zapper.

The only fees incurred are for top-ups via a local bank card for over R1,000 — a 3% rate of the amount is charged — and for cashing out, which ranges from R5 locally up to R65 internationally. There are caps on transaction limits per day, month and year from R30,000 up to R600,000.

How does Spot make money? "As an issuer, we earn interchange from merchants when the user uses our physical or virtual cards for a transaction, and we earn revenue from our marketplace partners," says Hugo.

Spot is targeting the 18-40 age group, otherwise known as Generation Z and millennials, who are either new to working, living in a house-share or part of a multi-income young family.

However, Hugo says it has a broader appeal as a number of privately banked individuals use the app. "They use it to pay their kids’ pocket money at varsity, send money to their parents or pay domestic workers because it is a zero-fee bank account."

Mark Elliott, president of Mastercard Southern Africa, says open banking globally is a big deal, from providing a secure way to interact financially to revealing additional revenue streams and generating new interactions.

"This often leads to an improved user experience as it evolves to the process of solving consumer pain points, and as SA’s first open banking offering, Spot is raising the bar by tapping into its potential," says Elliott.

The app will enable direct contactless mobile payments using Mastercard’s tokenisation technology, where a token and not the real card number is provided to the retailer.

"This prevents improper usage at any location and provides additional security and peace of mind for consumers and merchants, resulting in higher approval rates while minimising online fraud," says Elliott.

"We are also seeing a change in consumer behaviour and payment habits during Covid-19, resulting in an accelerated shift to digital payments and contactless transactions."

Trends like contactless are shaping the future, which the Spot money team is tapping into through the various contactless payment options built into the app, says Elliott.

Mastercard conducted a consumer sentiment study early in lockdown in SA and found that 75% of participants were using contactless payments as safety and hygiene precautions, and 64% said they needed to reduce or stop using cash altogether.

"This is a trend that is here to stay; eight out of 10 consumers said they will continue using contactless once the pandemic is over," says Elliott.

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