Digital wallet use soars in SA amid COVID-19

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 20 Apr 2020

SA’s digital wallets (e-wallets) players report an increase in the use of their services, as more South Africans turn to mobile wallets as they deal with constraints posed by the coronavirus (COVID-19).

MTN, First National Bank (FNB),and Absa told ITWeb they have witnessed an uptick in their mobile payment offerings, as more people regard it as a safer way to transact and pay for services during the lockdown. Payment service provider DPO SA says QR-code-based mobile wallets are also seeing rapid growth during this period.

As the number of confirmed COVID-19 cases this morning reached 3 158 and 54 deaths in SA, concerns have mounted over whether cash might spread the virus. This resulted in many people opting out of making cash payments, or using touch point-of-sale machines, amid fears of the spread of the coronavirus.

Globally, digital wallets such as CBA Tap & Pay, Apple Pay, Google Pay, Samsung Pay, Fitbit Pay and Garmin Pay reported a significant increase in the last month, as consumers look to avoid potential hygiene issues around handling banknotes.

Fears of contracting the coronavirus are expected to lead to more people using mobile-based payments, including those who had not previously considered switching.

“FNB can confirm eWallet transaction volumes have showed a consistent increase since just before the lockdown,” says Gugu Zikhali, FNB eWallet product head.

“Similarly, our eWallet Pro offering, which is designed for businesses to pay temporary employees, continues to show consistent usage volumes, especially among businesses that are operating during this period.”

FNB’s eWallet service allows anyone to send money to a recipient with a valid South African cellphone number, even if they don't have a bank account. It also provides access to prepaid products bought using eWallet funds, including airtime and electricity purchases.

FNB says it continues to monitor transaction volumes and will be able to determine conclusive send money trends post the national lockdown.

“We encourage consumers to continue using convenient channels to send money to family and friends,” adds Zikhali.

While MTN says it is not able to disclose statistics and growth figures, it confirmed it has witnessed an increase in use of its MoMo mobile money service in the last five weeks.

“There has been a significant increase of MoMo usage since the COVID-19 pandemic hit SA, and we have more than doubled the value of transactions for March,” says Felix Kamenga, chief mobile financial officer at MTN South Africa.

“For MoMo, we’re seeing increases in registrations specifically in peer-to-peer remittances with people sending money to family and friends during the lockdown. We have also seen more added-value services such as prepaid electricity, data and voice being bought.”

MTN relaunched the MoMo platform in January, in partnership with Ubank, about four years after the service failed to take off in SA. It was originally launched in 2012 and discontinued after it failed to maintain a strong track record locally.

MTN says it has introduced MoMo social bundles and waived fees for sending money under R200 – factors which resulted in a hike in activity on the MoMo app.

“One of our observations is that consumers are increasingly more comfortable using digital channels to transact and we hope this trend will continue even after the lockdown ends. The overall fees reduction seems to have stimulated activity as it essentially offers a free MoMo trial to consumers. Registration is free, there are no monthly fees, no fees for opening and keeping a MoMo account and there are no fees to get money in,” Kamenga points out.

The World Health Organisation advised the public to immediately wash their hands after handling cash after it emerged the virus can last for several hours on surfaces.

Absa Bank says a large number of its debit card customers have migrated to online channels (the app and Absa Online) since the start of the lockdown.

“We have seen a 63% increase as a percentage of total value per day online, while the volumes of tap-and-go transactions on credit cards doubled.Customers are also using CashSend to send money to family and loved ones in need during the lockdown period from the comfort of their homes,”says Christine Wu, managing executive, Customer Value Management, Retail and Business Bank at Absa.

Standard Bank had not responded to ITWeb’s questions by the time of publishing.

Driving the cashless society

The QR-code-based payments ecosystem is also witnessing a significant rise as more people use their phones to pay for goods.

DPO SA, which owns several payments platforms, including PayGate, PayFast, Setcom and PayThru, says mobile payments such as MasterPass, Zapper, SnapScan and Samsung Pay are gaining accelerated traction, as the ecosystem edges closer to the cashless society analysts have been predicting for years.

“There is no doubt that an unintended consequence of the coronavirus will be the fast-tracking of the cashless society we have all been talking about for years,” says Brendon Williamson, CSO at DPO SA.

“We expect to see contactless payment methods like MasterPass, Zapper and SnapScan gaining a lot more traction.”

As many businesses take a critical look at how they can deliver services in an uncertain future, local retailers Shoprite Group and Pick n Pay this month started accepting QR payments which allow customers to scan the QR code at the till point with their phones and pay with Masterpass, SnapScan, Zapper, FNB Pay or Nedbank Pay in any of its stores.

All big four local banks − FNB, Absa, Nedbank and Standard Bank − support Samsung Pay, which allows users to pay using only their smartphones at any payment terminal that supports contactless payments.

While nobody is certain about possible further lockdowns, Williamson believes most customers will prefer to not hand over their cards or input their PINs at pay-point machines and ATMs in future.

“In recent weeks, we have seen legislation supporting interchange rates that enable a rapidly growing QR-code-based economy. We will expect to start seeing stores becoming more reluctant to take cash and to start promoting digital transactions in order to make the payment process safer for their staff,” concludes Williamson.