After a nine-month trial period, Absa says it will soon provide a contactless tap-and-go payment system.
The initiative allows consumers to pay for low value purchases simply by tapping their cards against a reader at tills in retail outlets.
Managing executive for Absa card division Arrie Rautenbach says: “Our early-adopter customer group, who have been using the cards during our trial period, have been enjoying the convenience of these offerings at our trial merchants.”
Rautenbach says a few key retailers are starting to roll-out tap-and-go payments, and the bank will soon make it possible for its customers to obtain their tap-and-go cards from Absa branches.
Contactless payments will be available through a prepaid card or the normal debit cards. Using chip card technology, the bank says the offering is designed to provide consumers with speed and convenience at the point of sale.
Absa says commuters will also be able to pay their taxi fare with the tap of a card.
Mobile future
“In future, this payments infrastructure in retail outlets will also allow Absa customers to make tap-and-go payments via their mobile phones,” says the bank.
According to Absa, the prepaid contactless card works in the same way as the prepaid model utilised in the mobile phone industry.
“Customers can load funds onto their card from a bank account or through the use of cash by utilising a point-of-sale, transit kiosk, Internet banking or an ATM.”
At the point of sale, no PIN or signature is required, and the customer just has to agree to the amount and tap the card against the reader.
Absa says it has imposed certain limits on this payment solution in order to control and manage the cards. Each transaction will be limited to R200 or less, and a user can load a maximum of R1 500 on the card with a total monthly transaction limit of R3 000.
“This is in line with the special exemption from the provisions of the Financial Intelligence Centre Act, which makes the issuing of contactless cards to under-banked consumers possible,” says Absa.
Is it needed?
According to a report by Juniper Research, published in April, 20% of smartphones will have near-field communication (NFC) technology by 2014.
The research firm also estimates there will be the rapid adoption of NFC over the next three years, with 300 million smartphone users worldwide utilising the swipe-to-pay system. Juniper does, however, warn that NFC needs to mature before it can fulfil its potential.
In another survey, conducted by online retailer Retrevo, 79% of consumers surveyed are either not interested in a mobile phone with NFC (53%), or do not know what NFC or a mobile wallet is (26%).
In the South African context, the use of NFC in cards is expected to see better adoption than contactless payments via mobile phones.
Yolande van Wyk, CEO of eWallet solutions at First National Bank, says the banking sector has been developing NFC technology for some time.
“We have been looking at developing contact-less payment mechanisms for the transport sector specifically,” says Van Wyk. “Transport could be the one sector where contact-less payments may be taken up on a larger scale in SA - simply out of convenience.”
Van Wyk adds: “For people to take up a new technology, they must have a real reason to do so, and I don't believe the necessity is there yet.
“We're still struggling just to get mass take-up on the use of debit cards in SA. We're seeing a vast number of people still withdraw all of their money after pay-day and use cash for all transactions for the rest of the month.”
Huge opportunities
Standard Bank's electronic payment service, mimoney, will roll out what it calls the biggest NFC project in SA at next month's Oppikoppi music festival.
The facility will allow festival-goers to pay for tickets, goods and services using a tap-and-go payment card. The cards will be issued free of charge to all visitors.
Geraldine Mitchley, manager at Beyond Payments, says the technology is suited to the unbanked market and those that do not have a credit card to pay for ticketing and goods.
“There are huge opportunities for NFC technology in SA. Soon, NFC will enable people to pay for their TV licences, airtime and electricity bills, and manage their cash via their mobile phones,” notes Mitchley.
Mimoney works by converting cash into electronic currency onto a mobile phone or card, and no transaction fees are involved. Mimoney, which started in November 2008, is not exclusive to Standard Bank users.
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