Over five million South Africans will soon have access to credit shopping through their mobile phones.
A local company has developed an application that gives people with access to in-store credit the opportunity to buy products through their shop accounts. Retail Mobile Credit Specialists (RMCS) is rolling out its Over the Air system to Edgars' 4.2 million credit customers in a move that it claims is a world-first.
CEO Terence Lazard says this will allow Edgars customers to buy clothing, airtime, prepaid electricity and other items through their phones. “Forget about the Internet, everybody has a mobile phone; we are going to make the mobile phone a virtual shop.”
Lazard says the retailer's credit base will have access to thousands of products through their mobile phones - from magazine subscriptions to insurance and music. It will all be paid for through their store accounts.
In the next two years, he expects 65% of SA's population to buy airtime through his system. The airtime market is worth R35 billion a year.
The system is different to mobile-payment solutions, Lazard says, as it taps into a base of pre-vetted credit consumers and does not require an “account” to be set up to transact.
RMCS will make the system live to Foschini customers in the next few months. Foschini is SA's second-largest clothing credit retailer, with 2.6 million customers on its books.
In addition, Foschini owns credit provider RCS, which provides credit offerings to other retailers such as Game. Adding RCS to the clothing retailer's base takes the amount of possible consumers through the group to around four million, explains Lazard.
Convenience
Lazard says the mobile solution should become a large percentage of sales for retailers in the near future. He says the potential customer base is as big as 18 million people.
The offering is being rolled out to Edgars customers. Lazard says people are being added to the system daily, and expects to have reached 90% of Edgars' 4.2 million credit customers within the next 18 months.
The system went into a pilot phase in March after five years spent developing the model and persuading the retailers to buy into it. In addition, integration is tricky, due to the vastness of companies such as Edcon, of which Edgars is a subsidiary. Edcon has over 1 000 stores nationally.
Of the people who have registered, 18% use the system to shop everyday. Most of the purchases are airtime, but this is to be expected, notes Lazard. He says accounts are limited so that people can not spend all their credit on airtime, or electricity.
RMCS also has plans to go global with its offering, as there are 15 other countries with a similar model of store cards providing financing. “We want to max it out in this country first and then we want to grow it,” Lazard says.
Steve Ambrose, MD of World Wide Worx Strategy, says the concept is a clever one, and gives the millions of unbanked South Africans access to a form of credit. “It will bring a lot of convenience to a lot of people.”
However, he is concerned that, with a move to lower margins, and the expansion of the solution, companies like Edcon could open themselves up to more bad debt.
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