BankServAfrica says it is working to address key challenges associated with nationwide adoption of new rapid payments system PayShap, as it aims to process around 500 million financial transactions per annum in future.
This was revealed yesterday during a media conference organised by local fintech firm Ozow, in Cape Town, where panellists discussed multiple ways of reaching SA’s unbanked and underbanked population, under the theme: “The future of open banking”.
During the discussion, Mpho Sadiki, head of real-time payments at automated payments clearing organisation BankServAfrica, unpacked how the recently-introduced PayShapbanking service drives financial inclusion in SA through open banking.
He expanded on how BankServAfrica and partners are working to eliminate some of the pain points currently associated with using the system, which wants to digitise SA’s nine million underbanked population.
SA’s fintech sector previously raised several concerns regarding the operating model of the inter-banking payment programme launched in March by BankServAfrica, in partnership with the Payments Association of South Africa and Banking Association of South Africa.
Hailed by industry players as a game-changer in SA’s digital payments ecosystem, PayShap allows South African bank account-holders to instantly pay and receive money (up to R3 000 per transaction) between participating banks.
PayShap, currently available at four participating banks in SA − Absa, First National Bank, Nedbank and Standard Bank – also seeks to make conducting transactions without the need for bank account details possible. This is done through public and private identifiers, such as a registered mobile number or an e-mail address.
Fintech players cried foul on some of the pitfalls of using the system, including high prices, a complex sign-up process and the lack of a business-focused feature within its multiple offerings – factors which they said could hinder wide-scale adoption of the service.
During the panel discussion, Sadiki highlighted fundamentals that will be key to nationwide adoption of PayShap, noting BankServAfrica has invested heavily in marketing and educational campaigns.
“The biggest two challenges that keep me awake at night are the UX [user experience] and on education to ensure customers get to a point where they are comfortable with using a proxy (PayShap ID) instead of a card number.
“There is still a lot of work to be done to push the marketing to drive adoption of PayShap. We are looking to close the year with a total of eight banks live on the programme, which will be a significant weight. The challenge will be around user experience and getting it to a point where each of the customers understands how to access and use it,” he explained.
The fintech industry had also complained that the system launched with prices that are more expensive than existing e-wallet services and EFT transactions.
Responding to this, Sadiki pointed out: “While it's not my role to comment on market prices, South Africa’s banking industry is highly-competitive and it has been for a number of years and it continues to be so. The right price point will be found through the right competition dynamics. We can't set prices, but rather we enable the ecosystem with an infrastructure and then the banks take it to the market relative to the value of the service.”
A fully-embedded business function called “Request-To-Pay” is expected to launch between the fourth quarter of 2023 and first quarter of 2024, he added.
First announced in 2017 by BankServAfrica, the platform enables instant digital payments between banks via a real-time clearing system that processes transactions within 60 seconds.
It is the first part of the banking industry’s Rapid Payments Programme. This has a broader vision to unify SA’s entire banking sector under the common goal of modernising the industry to include citizens who have historically relied on cash as their primary payment method and introduce them to a mobile-friendly instant payment platform.
Fintech industry players previously told ITWeb the inter-banking payment system is poised to revolutionise digital transactions in SA, by creating a simpler, safer, instant payment ecosystem that would give consumers the ability to make real-time payments and contribute to building a reliable and efficient national payments system.
Also speaking during the discussion, Busi Radebe, head of card and electronic payments at Capitec Bank, explainedthis service will solve a number of business challenges, particularly for informal merchants.
“When it comes to challenges, simplicity is key because if a customer does a mobile payment and they have to go beyond four taps on their phone, that is already friction. Another thing is the language used in the banking apps; when you want to drive adoption, you leverage words which people are familiar with. For instance, if we call the user ID a proxy, we've already lost people who don't know what a proxy is,” noted Radebe.
Gary Stone, head of payments and regulatory at Ozow, pointed out: “I think the simplest thing that we need to understand is that we need to emulate the use of cash; so, when two people exchange R50, there are no hidden costs. If PayShap emulates this, it is going to be a great success.
“Due to the multiple ecosystem players that have a role in PayShap, we also really need cooperation from all industry players, and you will find that the skills that come as a result of this cooperation will solve some of these problems.”
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