While 2020 brought significant disruptions to many industries on the back of the COVID-19 pandemic, 2021 has been a year of recovery. Many sectors saw an uptick from a payments perspective, sustained despite impediments to business such as looting, loadshedding, port and rail disruptions, and further waves of COVID-19 infections.
Hopefully this bodes well for further economic upturn for the country’s economy in 2022, says Andrew Hardie, CEO of Pay@, one of Southern Africa’s leading payment solutions providers.
Hardie unpacks some of the trends that took shape throughout 2021:
Sectors show signs of recovery
Some sectors took a tumble at the onset of the pandemic but showed an uptick in 2021. These included the tourism industry, which posted 43.5% year-on-year growth in 2021, despite travel restrictions and concerns among travelers over contracting the virus or facing cancellations.
Money transfer type payments have posted a significant increase during 2021. These transactions first increased during 2020, when closed borders meant the market could not access informal transfer methods such as taxi and bus drivers delivering cash to loved ones in other countries. People have continued to send money during 2021, and this activity increased further following the period of looting and riots.
Pay@ services a large portfolio of insurance companies and Hardie notes how insurance payments have continued to grow, in particular life and funeral insurance payments.
Payments start pouring in
One of the industries hardest hit in terms of bill payments at the height of the COVID-19 lockdowns was debt collection. But in 2021, the debt collection category increased by 30% year on year, which could result from consumers having more financial certainty in 2021.
Municipal payments also showed recovery as the economy began to normalise in 2021. We saw municipal payments increase by 12% year on year, but growth remains slow as many South Africans still prioritise other bills such as school fees. The payment of traffic fines is still far from pre-pandemic levels, but payments have started to increase. We saw a 24% year-on-year increase in traffic fine payments.
In-store payments remain highly relevant and digital growth surges
People have always relied primarily on cash and cards for bill payments, but 2021 has brought increased digital payments. While cash and cards will still drive payments for some time, especially in the retail space, we’ve seen a substantial increase in the volume of payments by digital presentment methods. This includes wallets by telcos and retailers, payments via QR codes and contactless payments through cards, phones and smartwatches.
These digital payment methods are only going to become more popular with the marked increase in e-commerce. Debit and Credit card payments as well as EFT push transactions have become increasingly sought after for payments in the online space thanks to a change in consumer behaviour during the pandemic.
In response to the surge in online payments, Pay@ is enhancing its card offering, with card-on-file capabilities, which allow for one click payments or the ability to run recurring transactions easily. Our solution offering is backed through Visa and Mastercard Tokenization security which ensures that card details are kept safe and secure.
Pay@ is also working with banks such as Capitec, Nedbank and FNB to introduce direct EFT Application Programming Interface (API) links into these banks. The direct EFT API’s offer the best experience for end customers and allows for transactions to be directed into the banking channel for the customer to approve without needing to use a third-party instant EFT payment provider to access their account or to do a beneficiary payment.
Finding a future fit
Pay@ continues to see the value of providing its numerous payment options to businesses. Businesses need to incorporate digital payment methods alongside the traditional use of cash and card and it is becoming increasingly important for billers to find the right bill presentment medium for their customers.
Hardie concludes by saying that for industries to continue to grow transaction volumes businesses need to provide customers with a myriad of safe and convenient ways to pay. “Now more than ever, efficacy around the collection of bills is critical for the liquidity of businesses.”