Almost since payment cards were introduced, Visa and MasterCard have been the dominant forces of making payments in-store. They became even more commonly used after their adoption for online payments bred familiarity with how easy they are to use – and that’s especially the case now that contactless payments are taking root. In South Africa, this is very much the status quo as well, and MasterCard and Visa credit cards and debit cards are widely accepted across the nation.
As more people become accustomed to online banking and the use of plastic for making transactions, cash is slowly becoming a less-used form of payment, with cash-only vendors being whittled down to a minority of businesses, such as market stall operators. Credit card companies are said to be one of the driving forces behind this cashless future of Africa, with big names like MasterCard investing heavily in public-private partnerships to make financial inclusion sustainable. However, in doing so, the credit card companies have normalised people in South Africa to making transactions digitally instead of with cash, which has opened the door to more innovative payment methods. Now, alternative transaction methods are gaining traction in South Africa for the better.
The rise of eWallets
One of the world’s leading eWallet services is Trustly and has become a first-choice transaction method for many people due to its simple use, the fast speeds of its transactions, and it catering to businesses accepting payments and transfers from bank accounts across 29 different countries – at zero additional cost.
It has become particularly popular at online gaming websites such as the South African Karamba Casino, where it competes with many other traditional card and eWallet services but has come out on top due to its specialised Pay N Play system. This innovative feature of Trustly makes gaming even easier for players as it collects the verified KYC data from the user when they make deposits, eradicating the need for the user to fill out registration forms or send in proof of identity at the gaming website, while keeping all of that information safe and secure, per SBC News.
People were very quick to pick up on contactless credit and debit card payments partially due to an already established use of online computer and mobile banking. Mobile phones have become a go-to method of making payments, which is why eWallet services, which make payments quicker and more secure, have become a new favourite. Due to the levels of distrust in the government’s financial systems in South Africa – and across Africa as a whole – services which are mostly free to use, allow people to make payments, and high levels of security and encryption have been adopted very quickly.
Cryptocurrency starting to take root
The year of 2017 was huge for cryptocurrencies as they finally made it to the mainstream. Admittedly, much of the mainstream discussion concerned the bursting of the Bitcoin ‘bubble,’ but its appearances on the news alerted people to the potential of cryptocurrencies in the current global financial climate, particularly in developing economies. As noted by Quartz Africa, Bitcoin has become the leading parallel currency in Venezuela as the nation’s fiat currency has been reduced to being worth next to nothing. In Africa, cryptocurrencies are also being used to facilitate cross-border transactions, becoming very popular in South Africa.
The issue that many African nations have faced over the years is the governments mismanaging the nation’s money, with the central banks overseeing absurd rates of high inflation and requirements to print money. Cryptocurrencies are decentralised and not under the control of a governing body, and while they have been seen as volatile in recent years, they offer a much better alternative to the disastrous central bank policies at a time when nations like Egypt, Ghana, Nigeria, and Zimbabwe are experiencing double-digit inflation rates, as shown by the United Nations.
Now, South Africa, Kenya, Botswana, Ghana, Nigeria, and Zimbabwe are seen as the main Bitcoin countries. As further political and financial unrest continues across the continent, more people are turning to this new form of money as it’s inherently more trusted than governments. October 2017, South Africa saw the rand suffer its largest drop in a decade due to political infighting, with Coin Telegraph citing this as one of the driving events towards the volume of transactions for cryptocurrency rising 130 per cent in Africa in 2018.
The way that South Africans make payments is changing at a rapid pace. Where once credit and debit cards were commonplace, the security and trust of eWallet services and cryptocurrencies are now becoming the preferred options.