2021: The Year of the Online Payment

As the world moved indoors two years ago, the online payment space flourished. These are the biggest developments in 2021, and a brief look ahead.

This year, South Africans embraced e-commerce, mobile commerce and digital payments like never before – all four major banks have seen massive increases in these payment methods since the start of the pandemic. Absa, for one, says 66% of people now prefer electronic payments over cash.

“This trend will only increase in the coming years with more convenient solutions that meet the customer on the platforms of their choice like WhatsApp for example,” says Andrew Springate, CEO of technology and financial gateway service provider PAYM8.

To prepare for the increased volume, South Africa is busily setting up for success.

Three developments stand out in 2021.

  1. DebiCheck goes live

The time of rogue debit orders is gone, or at least, it should be. Authenticated collections, known as DebiCheck, replaced NAEDO and AEDO on 1 November 2021. “DebiCheck requires debit orders to be authorised by the debtor before processing and will do away with the debit order abuse that has plagued South Africa in recent years – whether that was companies processing invalid debit orders or consumers unfairly disputing debit orders with their banks,” explains Springate.

Now, debtors simply have to electronically authorise new debit orders on a once-off basis, giving their bank the details of the agreement and preventing debit orders outside these terms.

“PAYM8 is particularly proud of being an industry leader in terms of DebiCheck readiness and implementation, as well as Enhanced Debit Orders (EnDO) in Namibia,” says Springate.

  1. Instant EFT under the magnifying glass

The South African Reserve Bank cautioned South African consumers as well as the payments industry on the risks associated with instant EFT.

Springate elaborates: “As instant EFT became a popular payment method due to the convenience of immediate payment confirmation, the solution came under the spotlight as a result of the requirement of giving sensitive bank information to a third party. Instant EFT payments use a method called screen scraping, which raises a possible concern of having your bank account data compromised by making it potentially possible for a third party to access a clients banking credentials.

The SARB said it does not support the use of screen scraping to effect payments, given that it exposes consumers to data leaks, fraud, financial loss and even a breach of contract with their bank’s terms and conditions which regulate internet banking.

  1. RPP gets the go-ahead

The Payments Association of South Africa announced the arrival of the Rapid Payments Project (RPP) next year. “RPP will allow people to make real-time bank account-to-account payments using an identifier like a cell phone number or email address, without the need of remembering the account detail,” says Springate.

Some estimates say that by 2023, RPP will be the most preferred e-payment option in South Africa. “It will also deepen financial inclusion and contribute to building a safe, reliable and efficient national payments system,” adds Springate.

The year ahead

PwC’s Payments 2025 & Beyond report, published this year, says global cashless payment volumes are set to almost double from 2020 to 2025, and triple by 2030.

Says Springate: “The acceptance of digital transactions will be a permanent shift after the pandemic – it’s safer, contactless and more convenient. Having tried and tested it in recent months, consumers have also come to trust digital transactions more. We’ve seen mainstream institutions and traditional banks accelerating their digital offering, but non-bank payment providers are often able to adapt faster to specific customer needs – making fintechs the trendsetters in the race to the digital, cashless future.”

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