Huge demand for tap-to-pay offerings in SA

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 13 Feb 2024
There remains fertile ground for compelling digital payment options to enter the South African market.
There remains fertile ground for compelling digital payment options to enter the South African market.

The digital payments landscape in South Africa has evolved even faster than that of e-commerce, with digital wallets and tap-to-pay offerings such as Apple, Samsung and Google Pay increasingly gaining traction.

Over 50% of surveyed South African respondents indicate they use digital wallets and tap-to-pay offerings as a payment method at merchants.

This is one of the key findings of a new consumer report released by payments infrastructure company Stitch, focused on payments preferences and shopping behaviours in SA’s e-commerce landscape.

The report is based on a proprietary survey of over 350 South African consumers, conducted by Stitch and research firm Yazi in December 2023.

According to the report, South Africans across different income brackets are spending roughly 10% of their income online.

The rise in online spending has been a boon for card payments, which remain by far the most dominant payment method for e-commerce, it says. However, a growing customer base and the need for more efficient and cost-effective payment methods created an opportunity for new options to emerge, with pay-by-bank, and increasingly, digital wallets and tap-to-pay methods coming close behind card payments for online and in-store payments.

“Compared with a similar study conducted in December 2022, this year’s survey found a very different picture,” states the report.

“While card and pay-by-bank remain top payment preferences, with 71.8% and 43.9% of respondents, respectively, choosing these as at least one of their preferred options, additional tap-to-pay methods like Capitec Pay and even mobile money, have gained ground.

“Most notably, Capitec Pay, which was mentioned by 25.9% of respondents despite launching just last year, is proof that South Africans are open to adopting new payment options that meet their evolving needs.”

Capitec Pay enables cardless payments online or in-store. South African banks have increasingly embraced tap-to-pay offerings, such as Google Wallet, Apple Pay, Samsung Pay, as they look to expand their contactless payment solutions.

SA first witnessed an escalation in demand for online and contactless payments during the pandemic lockdown, when many people opted out of making cash payments, amid fears of the spread of COVID-19.

According to the Stitch report, since then, the growing sophistication of online shoppers in SA is enabling consumers to build comfort with online shopping infrastructure, hence they are more willing to try new payment options that meet their expectations for speed, security and seamlessness.

“This creates an opening for compelling options to enter the market and better address customer needs. For businesses, one way to manage and optimise multiple and new payment methods and providers is through payments orchestration platforms, which allow businesses to easily view and reconcile all transactions across methods in one place, and optimise based on which is performing best.”