Starting today, one of South Africa’s most popular online payment service, PayFast, is enabling sellers using its services to easily start accepting bitcoin payments from local and international buyers.
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This news comes after PayFast entered into an partnership with South Africa’s biggest bitcoin exchange, BitX, which will allow buyers to make bitcoin payments to PayFast’s 30 000 merchant clients. Customers shopping online now have the option to either pay using Mastercard, Visa, Instant EFT, or bitcoin.
Moreover, the system is unique in that it tries to shake off one of bitcoin’s biggest disadvantages as a payment method — volatility. Customers can opt to pay for whichever item, or service in bitcoin while sellers, in turn, will receive South African rand in their PayFast accounts (and then, bank accounts). When a user decides to pay with bitcoin, the real-time ZAR / BTC rate would be displayed, and the transaction exchanged accordingly.
In a recent blog post, PayFast lists some advantages to accepting and using bitcoin:
- It can be much cheaper to accept bitcoin than other international payment methods
- Transactions are not subject to reversals or costly chargebacks
- Payments can be sent and received from almost anywhere in the world
- It is fast (particularly compared to international bank transfers)
As the case with PayFast’s other payment methods, the transaction will immediately be reflected in the merchants PayFast account. The difference would be that the transaction fee is only 1.9% (to change after October) compared to EFT’s which charges two percent, and credit or debit cards which charge 3.9%. While these numbers might seem trivial, after a years thousands transactions, they can quickly add up.
Chatting to the Wall Street Journal’s MoneyBeat, founder of PayFast Jonathan Smit says that this move is exploratory for the most part. “The position we are taking is not necessarily driven by a clear business case but we are always on the lookout for alternatives and we are always looking for ideas that could become something.”
Marcus Swanepoel, BitX’s CEO says, “We are very excited to partner with PayFast to bring the benefits of cryptocurrency to a much broader market, especially with the very clear value proposition they bring to their merchants.”
As we’ve seen before, bitcoin in South Africa is still only accepted by few online companies. This latest partnership will most likely increase that number and also helps bring bitcoin as a currency into the commercial stream of online business. Head of Marketing at PayFast Werner van Rooyen tells Ventureburn that although it’s still early days for bitcoin, it’s still very exciting. He also adds:
“We’re not expecting a lot of immediate transactions as there are still a limited amount of people who own bitcoin. The question in South Africa has always been ‘Okay, I have some bitcoin , now what do I do with it?’. With Bitcoin available as payment method at various PayFast merchants, they finally have an answer.”
One of the first major online retailers in the US to accept bitcoins, online retailer Overstock, hit a massive spike when it made more than US$124 000 in bitcoin sales on January 10, 2014, its first day of accepting the currency.
Update: Soon after the partnership between Bitx and PayFast, one of SA’s biggest ecommerce stores, Takealot, announced that it will include the bitcoin payment option to its site.
In a press release, Takealot CTO Willem van Biljon says that, “At Takealot we strive to be innovative and customer centric; Offering bitcoin is another example of how we strive to achieve these ambitions.”