Contactless payment: Inclusion comes to banking

The past year has brought about many digital changes, with an overwhelmingly positive one being the rapid uptake of tap-to-pay contactless payment. Accelerated by fear of contaminated surfaces, the convenience of simply touching your card to finalise a transaction is second to none. 

Now with Apple Pay available in SA through Absa, Nedbank, Discovery Bank and FNB, the move towards contactless payments will only quicken. And it’s not because Cupertino is the first to offer this; Near-field communication technology that enables payment through smart devices is available from Samsung, Fitbit and Garmin locally. Rather, Apple and its tech-savvy fans set the digital trends which others follow. Soon, this could mean even taking out your wallet will be considered too much of a hassle — simply twist your wrist to tap your smartwatch. 

Convenience is king?

The convenience of tap-to-pay is undisputed and ties in with findings from Rogerwilco’s 2020 SA Digital Customer Experience report. Sixty percent of respondents said they have switched to a rival retailer’s website because it made it easier for them to buy the product they wanted, even if it was more expensive than their first-choice e-tailer.

Granted, this referred to online buying, but Visa’s Back to Business study claimed a similar figure — 54% of consumers, particularly millennials, would switch retailers if a contactless payment solution were provided. 

When it comes to payment, it seems convenience has dethroned cash as king. Well, not quite. 

Marginalisation a growing concern

We are still a long way away from a cashless society, especially in lower-income areas. Rogerwilco published its 2021 SA Township Marketing report, and it shows cash remains the overwhelming favourite method of payment. 

The use of cash can be tied to findings from Merchant Machine, which ranks SA as the 16th most unbanked country in the world, with 31% of the population without a bank account. A move towards cashless payments via smart devices or credit and debit cards runs the risk of even further marginalising the poor. Not everyone had the luxury of ordering groceries online in the middle of a pandemic — a small example of the problems created by being unbanked or underbanked. 

Finding an inclusive solution

There needs to be a bridge between cash and contactless payments, and one of the ways this can be done is through QR codes. When first introduced, QR codes were slapped on everything but used by no-one. However, in the past few years we’ve seen the innovative use of QR codes in the payment space, with SnapScan and Zapper locally making strong inroads to popular usage. SnapScan recently announced that its Wallet feature would allow peer-to-peer payments for Android and iOS users.

And here, too, the pandemic increased uptake, with local online payment gateway PayFast reporting a 412% increase in QR code payments for the year ending February 2021. 

For banks, the rise of QR code payments allows an elegant solution to extend contactless payment options to the poor. For the underbanked and even unbanked, there’s the opportunity to be paid via QR code as we’ve seen with informal employers holding out a SnapScan code to be scanned. 

More recently, an app called Tipped allows QR code payments to car guards to go directly to a free e-wallet. Money in the e-wallet in turn can be used to purchase airtime or electricity, to shop from select retailers, or for it to be transferred to a bank account.  

Banks need to get their hands dirty

This precarious balancing act is not unique to SA. Many other countries are struggling to ensure that, while moving towards the convenience of contactless payments, the poor are not further marginalised, especially those who are unbanked.

The rise of TymeBank, having managed to secure 3-million customers in just over two years, says a lot about the convenience and lower bank charges that digital banking affords. Similarly, QR codes and e-wallets hold excellent opportunities for the future — if our banks are truly willing to get stuck in.

The impetus for change should be seen as a challenge for the banks to come up with inclusive solutions, and sooner rather than later. 

About the author: Charlie Stewart is Rogerwilco CEO.

This article was paid for by Rogerwilco.