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South Africa is primarily a cash-driven society with more than 60% of all transactions conducted in cash, rising as high as 90% in rural and peri-rural areas. However, with the number of cards in circulation growing, an opportunity exists to increase electronic payments.
Innovation in payment options is driven by convenience and card payments have evolved from zip zap machines to electronic terminals. We have experienced trust or security improvements with the introduction of EMV (chip and PIN cards) and in more recent years we have seen the use of QR Codes as a method of payment change the purchase experience in restaurants.
The introduction of contactless payments are significantly decreasing the interaction time at the register and when it comes to convenience contactless competes with cash for low-value transactions. In markets such as the UK, contactless payments now account for one-third of all card payments and is one of the main reasons why cash is no longer the primary method of payment.
Locally contactless is widely enabled on bank cards but not yet broadly activated across retailers. This is expected to increase rapidly from October 2018 when all new card machines deployed will be contactless enabled.
What we expect to see in the near future is payment transactions moving from a “one size fits all” interaction to unique interactions based on sector – an example of this in South Africa is the use of QR codes in restaurants, reducing the wait for card machines to be available, making payment from the table and reducing the payment friction.
In other markets, pre-order apps are used allowing customers to customise their order, set default payment, and simply walk in and pick up their order. Similar to the experience with Uber, you simply get out of the car and walk away.
The downside of consumer payment choice is that an abundance of options is creating complexity in-store, with multiple contacts for each payment or technology options, usually meaning different settlements with each provider, ongoing training of staff, multiple hardware devices on the desktop that exponentially increases the administration and reconciliation burden for store owners.
This is not only related to payment options but also the recent rise in popularity of delivery apps such as OrderIn, MrD and UberEats, further adding to a very complex restaurant management environment. Although revenues tend to increase the 15% to 20% charged by the app or service provider, we are now starting to see an increase in turnover but a decrease in profit for the restaurant.
In high net worth suburbs, restaurants often pass on the service provider costs to the consumer with an increase in price when compared to in-store or collection, but in the majority of South Africa — consisting of smaller towns and cities — this is not possible, and with delivery increasing to 30% of the overall order, profit is negatively impacted.
In many pop-up market stores, we have started to see the owners reduce the number of options made available to customers to cards, and one of the many alternative (QR code) options. This is not optimal for a customer experience but limits the complexity and administrative burden to the owner of these pop-up stores.
Fortunately, we are starting the see more of a prevalence of an app based Point of Sale systems using application protocol interface (APIs) that simply and seamlessly integrate new technologies into a single platform significantly reducing the complexity.
The interoperability of QR codes will reduce the contracting requirements for stores who accept Snapscan, Zapper, Masterpass and other QR codes.
Featured image: Sureswipe managing director Paul Kent who wrote the article (Supplied)