Most online shoppers prefer to pay cash
A recent survey of South African online shoppers has indicated that cash is king for local shoppers with 43% stating that they prefer to pay with cash and believe having it as a payment option would make them feel more comfortable shopping online.
Recently released Effective Measure E-Commerce Industry Report, which surveyed 8 751 respondents in South Africa between July and August 2017, further indicated that the introduction of instant electronic transfers (EFT) as a payment option would encourage shoppers to shop online.
According to the results, 45% of the surveyed preferred to use credit cards as a payment method, while 21% preferred a debit card and 20% opted for bank transfers. A mere 7% were comfortable with using payment gateway providers like PayPal.
The survey furthermore found that 14% of the respondents said they would like to see a payment method they can trust.
"Aside from market adoption, the biggest barrier to online shopping is the lack of trust in online payments. Twenty percent of the shopper respondents listed this as the main reason they do not do shopping online. Just like online shopper respondents, offline shoppers believe that a payment method they can trust would encourage them to shop online. A simple instant EFT transactions option could solve a number of obvious online retail challenges, including trust," stated the report.
Thomas Pays, CEO of i-Pay, agrees adding that as e-commerce has become more popular, payment technology has also advanced to benefit consumers. "Consumers who are online demand shopping experiences that are less hassle than getting in the car and driving to the store, and the new generation of EFT payment integrations offer exactly that.
"In our experience, merchants and consumers alike appreciate a platform that comes with real-time instant payment notifications and as payments are always matched and easy to track, there is no additional administrative burden on the merchant."
Local research indicates that there are currently 18.43 million eCommerce users locally, with an additional 6.36 million users expected to be shopping online by 2021.
Efi Dahan, General Manager for Russia, Turkey, Middle East & Africa at international online payment company, PayPal - explained that SA leads the whole of Africa in online purchases, with expectations for online spending in the country to reach R63 billion.
"SA is one of the main markets. I think this is because of the mobile penetration happens much faster. Mobile is extremely important because people are starting to use their mobile phone not just to make calls or get WhatsApp messages or SMS; they use the mobile as a wallet. This is the future because mobile is also more secure and payment platforms know more about the user's behaviour," he said.
Karen Nadasen, PayU South Africa CEO, adds that online retailers - particularly those looking to launch their Web sites - should recognise that consumers are likely to remain hesitant for some time to come.
"Rather than a risk to online retailers, this is simply a good reason to offer alternative payment options such electronic transfers (EFT) to encourage consumers to shop online. EFTs are fast, easy, and completely secure - ideal for South African consumers who do not wish to use their cards online, or who do not have cards at all, but still want to enjoy the convenience of online shopping."
Nadasen adds that the market is also ripe for payment gateway providers to develop their abilities, "While EFT payments and the ability to process card payments online remain popular, payment gateway providers also continue to look at expanding their offerings.
"Online merchants are finding themselves uniquely positioned to take advantage of diversified payment methods such as crypto-currencies, one-click payments, subscription payments, and even a buy-now-pay-later option. It's expected more eCommerce stores will start embracing these systems as consumers seek the convenience of alternative payments."