Digital payments soar amid COVID-19 fears

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 20 Mar 2020
Thomas Pays, CEO of Ozow.
Thomas Pays, CEO of Ozow.

Demand for online and contactless payments is surging in SA, with many people opting out of making cash payments or using touch point-of-sale machines, amid fears of the spread of the coronavirus.

As the number of confirmed COVID-19 cases reached 202 in SA today, concerns have mounted over whether cash might play a role in spreading the virus. This after the World Health Organisation advised the public to immediately wash their hands after handling cash.

On Sunday, president Cyril Ramaphosa declared a national state of disaster, prohibiting gatherings of more than 100 people amid the coronavirus pandemic. Following his announcement, SA has seen many companies allowing employees to work from home, with citizens limiting their social distance and public movement.

Thomas Pays, CEO of online payment platform Ozow, says a growing number of retailers are scrambling to get online payment systems in place to meet a spike in demand from customers using contactless payment options via their mobile phones.

“We’ve seen a massive uptake in activity on our platform as we support our merchants to continue to trade as normal as possible. We’re currently processing around 35%-40% more transactions a day than we were a couple of weeks ago, and we’re being inundated by merchants wanting to go live on our system as their customers practise social-distancing and want to avoid touching cash and card machines,” notes Pays.

Ozow is an online automated electronic funds transfer (EFT) payment platform that works with various local retailers, including iStore, Builders Warehouse, CTM, Woolworths, Clicks, Waltons, Superbalist, Takealot and Flight Centre.

The greatest demand, adds Pays, comes from pharmacy groups and retailers that are processing huge volumes of e-commerce orders and deliveries from their stores.

While the full economic consequences of COVID-19 are still unclear, economists have warned of a looming global recession, as governments worldwide institute drastic measures across industries, to contain the pandemic.

Activities which require face-to-face interaction or getting out into the community are slowing down, as more people choose to stay home and make online payments or order food via delivery apps.

Peter Harvey, MD of DPO South Africa, which owns several payments platforms, including PayGate, PayFast, Setcom and PayThru, says PayFast has seen an increase in the number of transactions this month.

“While it’s still very early days, it does appear there is an overall increase in online payments when comparing payments from March this year to March 2019. Comparing this week to last week, we've also seen a 5% to 10% increase in overall transaction volumes.

“This is unusual as this week (the week before payday) is normally our lowest volume period in the month and it would normally show a decrease from the previous week. This points to increased online spending following the president's address to the nation on Sunday evening,” notes Harvey.

PayFast is a local online payment solution that accepts payments from local and international buyers via Visa, MasterCard, instant EFTs and more.

Harvey explains that industries witnessing the highest increase are pharmacies and medical supplies, general online retail, grocery stores, pet retail and wine/alcohol sales.

“On the other hand, the segments which have been disproportionately negatively impacted are ground transportation services, hotels and motels, travel services and luxury goods industries,” he adds.

Harvey is of the view that online shopping will benefit retailers, and having an online payment and delivery option is the best thing for retailers to do during this period.

“Having said that though, simply being online may not save you and there could still be some heavy collateral damage, especially for the smaller businesses. Making sure your store is seen in a very crowded marketplace will be more important than ever,” he notes.

Global online payments platform Boku told Barron’s that it has witnessed a 30% rise in payment volumes from people who pay for online gaming, music and video streaming services, as more people chose to stay home.

Pays believes the pandemic would further accelerate the global trend away from cash to digital payments, as necessity drives faster adoption.

“There’s no doubt that digital payments are going to be beneficial to both businesses and consumers at this time, as they look for ways to get through the crisis. Ultimately, I think this crisis will drive a real change in behaviour by getting more people to use digital payment options.”