South Africa’s long awaited and highly anticipated rapid payment programme (RPP), PayShap, offers huge potential to boost digital payments and, when used in conjunction with technologies such as Chat Commerce, could serve as a real game changer for businesses. But the disparity in launch pricing from local banks could hinder uptake, blunting the effects of the initiative, says Chat Commerce and mobile messaging leader, Clickatell.
“Instant account-based payments like PayShap are designed to help individuals and businesses improve cash flow by cutting the time to process payments from days to seconds. Who would say no to instant access to funds? The objective behind the initiative is clear, logical and already shown to work in other regions and BankservAfrica and the Payments Association of South Africa (Pasa) have done well to deliver the service,” says Brett White, Vice President of Product Payments at Clickatell.
The benefits of real-time payments have been hailed around the world with Brazil’s Pix Payments often referenced as a model for South Africa. Launched in 2020, the country’s instant payment system had already seen 119 million people receive money and 115 million send money in the month of August 2022 alone. More than half the population is registered for the service with more than 40% of small Brazilian businesses receiving payments via Pix, rising to 51% when it comes to micro businesses.
The fee structure of Pix is simple and has proved attractive with person-to-person payments free and business payments at only 0.01 Reals for every 10 transfers.
“Small businesses in particular should see immediate gains by using the PayShap payment option and, under optimal conditions, it could make a big difference. The retail sector would benefit from a high volume, low cost payment method and small and micro businesses flourish when cash flow is good and when their customers are given safe cashless payment options, although every business should benefit – if it takes off,” he says.
White points out that real-time payments, which can be made to a bank account or a proxy, such as a mobile phone number linked to a bank account or digital wallet, will also benefit organisations already using messaging platforms like WhatsApp for Chat Commerce deployments.
“PayShap will be a valuable payment method when deployed on chat platforms like WhatsApp and having bank accounts pre-authorised and pre-linked and associated with a user’s mobile number will greatly reduce the friction for customers. What’s more, since the banks aren’t comfortable with the concept of instant EFT because of the need for screen scraping, PayShap will add a valuable new method of payment, which is good for consumers. However, if the commercials don’t stack up there will be less incentive for the integrations to take place and it would be easier just to use the existing payment rails,” he warns.
White says the disparity in the banks’ pricing could impact the uptake of PayShap and is cause for concern.
The four participating banks have come out with fee structures that range from free for transactions under R100 to R45 for transaction values over R1000, and those with values between R200 and R1000 attracting fees between R6.00 and R7.50 from most banks.
“The lack of consensus between what banks are charging will cause confusion amongst users. In many instances the launch fees may be slightly cheaper than current immediate transfers, but are certainly more expensive than existing EFT charges, offering no real incentive to use the system. Making things overly complex will put users off and will impact the uptake of the service. If we want to see anything like the efficacy of what Brazil has achieved we should be looking to make things as simple, transparent and cost effective as possible. Unfortunately, this first iteration of PayShap is not that. We hope that the market will correct and banks will support the benefit of a service which was created to help businesses and individuals quickly access funds needed to survive,” White says.