South Africa’s online shopping industry is booming, with 2024 being a breakthrough year for eCommerce. There are currently 32.55 million eCommerce users in the country, which is expected to increase by 6.38 million users this year.  

So, clearly, there’s no better time for businesses to start selling online and, as a result, offer internet payment methods to their consumers. If you’re looking to expand into the eCommerce space or simply want to know the best way to purchase online, then keep reading.  

This guide covers why online payment methods in South Africa are important, a breakdown of the top payment options, and a few FAQs. Before we get into the nitty-gritty, you might also want to know how to set up online payments for small businesses.  

Why should you provide online payment options? 

Firstly, online shopping and banking are growing steadily in South Africa, with more than 70% of the population shopping online. All trends point to a steady increase in SA eCommerce, ranging between 20-35% annually. It’s predicted that 47% of offline shoppers could shift online within the following year. 

With so many promising trends and statistics, businesses should be running at the opportunity to provide South African consumers with online payment methods right now. Besides that, contactless and cashless payments are taking the market by storm as they are safer and more convenient than cash.  

 Have a look at the following benefits of online payments:  

Improved satisfaction 

Digital payments are more convenient since they can be made at any time from any location, which is faster and safer. All these factors lead to improved satisfaction for online shoppers. The risk of human error, unsatisfactory customer service, and long waiting lines common to brick-and-mortar stores are lowered or eliminated.  

Faster checkout 

One thing about an electronic payment method you can’t deny is how fast it is, especially compared to traditional methods. With a swift click of a button, you can make an instant payment. From a business perspective, this instant clearance can improve cash flow since outdated methods like cheques take several days to clear.  

Greater sales

Digital payments make it easier for consumers to purchase goods and services using their preferred method of payment, which leads to increased sales. Also, new online payment methods, such as Buy Now, Pay Later (BNPL), allow customers to buy goods that they normally wouldn’t pay for once-off due to affordability and budgeting.   

Lower costs 

Electronic payments are generally less expensive than traditional ones. They lower the need for postage costs, reduce the use of materials such as ink and paper, and decrease labour costs and bank fees. The costs of processing invoices are grossly underestimated, and this is where your business can save money by using digital payment plans.

Also read: Payment gateways in South Africa (2024).   

Most popular online payment methods in SA 

With all the reasons why electronic forms of payment are better than traditional methods, let’s look at the top ones used in South Africa. 

1. Credit cards

As of January 2024, credit cards have been the most common payment method for online shoppers in South Africa. 43% of all online purchases were completed using a credit card.  

Credit cards are payment cards issued by the bank which allow you to purchase items using pre-approved money that you can spend from the bank. You then repay the bank with monthly instalments (with interest fees).  

They allow consumers to pay for purchases at any time (so you don’t have to wait for your salary) in a convenient and secure way, making it a well-liked electronic payment method. 

2. Debit cards

Debit cards are just as popular as credit cards, allowing fast and easy payments directly linked to a bank account. So, instead of spending the bank’s money, you will be using their own capital to purchase goods on the internet.  

Although many South Africans use their debit card for online payments (58% as of March 2023), it’s still not as safe as credit cards when shopping online. If a criminal gets hold of your PIN or account information, they can very well empty your account.  

Nevertheless, it remains a common digital payment method among South Africans with generally lower processing fees than credit cards.  

6. Instant EFT payments

Instant EFT payments allow consumers to pay for goods and services electronically via internet banking. This online payment method is often offered by third parties in partnership with eCommerce stores. Ozow Instant EFT and PayFast are excellent gateways for immediate EFT payments in South Africa. 

With 57% of South African internet users shopping online, it’s no surprise that many are choosing to pay with instant EFT as it’s straightforward and rapid. It’s also a secure way to pay online, as your bank will send you an OTP (one-time-pin) or mobile authentication to verify payments.  

7. Buy Now, Pay Later (BNPL)

Buy Now, Pay Later (BNPL), also called a “point-of-sale loan,” is a short-term loan that allows you to pay for goods online, usually in monthly installments. Apps such as Payflex, PayPal, and PayJustNow are examples of platforms that offer this service. Thanks to these online payment options, consumers can purchase something immediately and then pay in instalments.  

This is great for many South Africans who may not have the means to purchase something pricey immediately, such as furniture, fashion items, and other expensive luxuries. One thing to look out for is the hefty penalties you’ll be charged for late fees and insufficient funds.  

However, due to the rapacious interest rates demanded by the credit industry, BNPL products have become popular and continue to grow in South Africa. This growth is also driven by digitalisation, an increasing working-age population, and its appeal to Gen-Z and millennials.  

Furthermore, South Africa’s BNPL market is set to expand at a cumulative annual growth rate (CAGR) of 35.1% between 2022 and 2027. 

8. PayShap

PayShap is one of the latest digital payment solutions, allowing you to pay and get paid in an easy and fast manner. You can receive immediate payments straight into your bank account from anyone, regardless of the bank they use. With its initial roll-out on 13 March 2023, PayShap is quickly gaining recognition among South Africans for its convenient and immediate online payments and real-time services.  

 You need to register for a ShapID before making any transactions, and these can take place between Absa, Capitec, Discovery Bank, FNB, Nedbank, Standard Bank or TymeBank. So, it can be used by anyone who owns a bank account, which likely contributed to its rapid uptake since its launch. To put that into perspective, PayShap managed to process nearly ten million transactions to a value of over R6.6 billion in such a short time.  

 There are currently over two million active ShapIDs in the country and this is expected to increase.

9. Cryptocurrency

Cryptocurrency continues to act as a viable means to pay for goods and services. As for South Africa, there are about six million (or 10%) of its population who own a crypto asset. As such, this digital payment method will likely grow in popularity, and its market is predicted to grow by 7.86% annually between 2024 and 2028.  

More and more online retailers and brick-and-mortar stores are starting to accept cryptocurrency as payment. Transactions made using crypto are only possible through a cryptocurrency wallet. Wallet applications are installed on your computer or mobile device, allowing you to access your crypto.  

 You can pay from anywhere with fewer fees, anonymity, and a reduced need for third-party involvement. Note that once you pay via this method, it cannot be reversed. Also, cryptocurrency is not regulated; its value changes over time, and there’s a risk of loss.   

10. QR code payments

A Quick Response (QR) Code Payment is a contactless payment method made possible by scanning a QR code from a mobile app. For this type of payment to process, you’ll need a smartphone with a camera and internet access. One security concern is that this method may be vulnerable to phishing scams if not encrypted. 

South Africa is no stranger to the growing trend of using QR codes. Scan to Pay is currently the largest QR ecosystem in the country, facilitating an average of 12 million transactions per month. SnapScan, Zapper, and Netcash Scan to Pay are other excellent options for the payment method.    

Contactless payments have become a standard option with most retailers in the last few years. What’s more, phones have essentially become an extra limb – one that people hardly ever leave home without. 

With this in mind, many businesses have added scan to pay and QR codes as an accessible and quick way to complete transactions. But do you know all the security and privacy benefits of scan to pay contactless payments? 

This guide will cover all the top advantages of using scan to pay QR codes for contactless payments. We’ll also get into some useful info about these methods and even how to set them up.

What is scan to pay and why should you use it?

Scan to pay is a simplistic, swift, and secure way of making payments by quickly scanning a QR code using your smartphone’s camera. Quick Response (QR) codes are a type of barcode that can be read by a variety of devices to access payment channels, Wi-Fi networks, and informational pages. 

As a form of contactless payment, scan to pay helps to reduce physical contact between the consumer and business employees. This made it hugely popular during the COVID-19 pandemic, as many people wanted to minimise touching possibly infected objects. Since then, many businesses have seen the benefits of using it.

This payment method also works exceptionally well with certain types of businesses, as it’s paperless, doesn’t require expensive POS systems, while making brands seem more future-forward.

How secure are scan to pay QR code payments?

Using scan to pay and QR codes is a secure method of retail payment. That’s because it does not require contact with the payment terminal – reducing the chances of skimming, tampering, or cloning. 

It also does not transmit sensitive data, like your card numbers and personal details, which helps to minimise risks like hacking, spoofing, or interception. 

That said, contactless payments are not without downsides. This technology is highly dependent on the customer’s smartphone security, which could be compromised by malware, theft, or phishing. Additionally, QR codes could be duplicated, manipulated, or replaced by fraudsters looking to take advantage of small businesses.

How to make scan to pay more secure for your business?

To make contactless payments more secure, there are several safety procedures you can put in place. These range from using custom QR codes to encrypting your business’s website. 

Here is what we recommend: 

• SSL-certify your website: A Secure Sockets Layer (SSL) certificate proves to your customers that their information is safe and shields them against hackers trying to create a fake site. This works in your best interest, as your consumers will feel secure using your online business.
• Use an SSO-enabled QR code generator: Utilising a generator with a single-sign-on (SSO) login will help to limit who is able to edit the code. In fact, only your business will be able to access the code management platform.
• Invest in a GDPR- and POPIA-compliant QR code generator: If your code generator complies with the General Data Protection Regulation (GDPR), it will protect your and your customer’s data from hackers or third parties. 
• Using custom QR codes: By making use of custom QR codes, not only can you help develop your brand’s image, but you can also safeguard your customer’s data. With unique code templates, it’s harder for scammers to modify them and exploit you.

Why are scan to pay and contactless payments beneficial for your customers?

We’ve gone over the benefits of why scan to pay and contactless payments are beneficial for the security of your business, but you might be asking how will my customer take this process? Well, besides the fact that contactless payment is such a commonly used transaction method today, it also has several crucial benefits for your consumer. 

• Faster payments: The typical paying process at restaurants, bars, and retailers can often be quite slow, especially at peak business hours. Using QR codes and scan to pay can save time for both the consumer and the merchant, as all they need to do is scan the code, pay for the service/product, and a notification pings when the transaction is successful.

• Safer transactions: Through dynamic data processes and encryption, contactless payments and scan to pay are more reliable and secure than older forms of payment. In addition, these methods are better equipped against fraud and scams.

•  Better flexibility and convenience: With scan to pay and contactless payment, the customer no longer has to worry if they’re carrying enough cash. They simply have to pay by phone, after authorising the payment through a pass code, biometric feature, or two-factor authentication. 

Privacy benefits of using scan to pay for contactless payments

Scan to pay can also be hugely advantageous for your business. However, consumers worry about their private data being compromised. That doesn’t have to be an issue, though, as contactless payments do have safeguards against that. Here are the top privacy benefits of using scan to pay for contactless payments. 

Scan to pay does not collect personal information

Let’s dispel the myth: using scan to pay with QR codes does not collect personally identifiable information like your name, address, and birthdate. Instead, it collects information specific to it, such as the number of times the code has been scanned, the operating systems of devices that have scanned the codes, and when the code was scanned. 

QR codes don’t live track you

Another mistruth about QR codes is that they can be used to track your location. Well, this is simply not true. When someone scans a QR code, the data is only collected there and then. And as mentioned in the previous point, it is only information about the QR code. 

QR code generators cannot obtain any of your personally identifiable information, and therefore, they cannot track where you are. The data is collected similarly to that of a photo – and will only be recorded at the moment when the code is scanned.

Drawbacks of using scan to pay for contactless payments

Sadly, scan to pay does not come without its disadvantages, so it wouldn’t be fair if this guide didn’t address them. From possible inaccessibility issues to less control for the merchant, here are the top drawbacks of using scan to pay.

Not accessible to everyone

The truth is that even today, in the Information Age, not everyone has smartphones. QR codes require smartphones with software advanced enough to scan them. Some users might be unfamiliar with scan to pay or simply prefer more widely-accepted options. 

Requires internet connection

QR codes also need Wi-Fi or mobile network access to work. If, as mentioned above, users have older smartphones or more rudimentary cell phones, they won’t be able to pay using the QR code. This can be where contactless cards come in handy – and it goes without saying that having multiple payment channels is best. 

User distrust and unfamiliarity

If your main customer base prefers paying with cash and cards, a big change like using QR codes might cause distrust in your business. This is especially true if they’re unfamiliar with scan to pay technology. 

This is definitely something to consider when setting up scan to pay at your business – and it could be a big risk. 

Frequently asked questions | Scan to pay for contactless payments

Even though this guide has given quite a thorough look into scan to pay methods, you may still be looking to answer some burning queries. We’ve collected some of the most commonly asked questions about scan to pay for contactless payments and responded to them below.

What scan to pay options are there in South Africa?

South African businesses and companies have taken scan to pay by storm in the last few years. Snapscan and Zapper were among the first mobile payment providers, but now all major banks offer scan to pay on their mobile apps. This includes Nedbank, FNB, Capitec, RMB, Standard Bank, and Absa. 

Moreover, even mobile network providers, like Vodacom and Telkom, offer scan to pay through the Vodapay and TelkomPay apps, respectively. Heck, even Engen has released the Engine1 app for paying via QR code, which they also use to market special offers at their 1Shops and to foster customer loyalty.

Why should your business go contactless? 

Besides just the convenience of using contactless systems for your business, it’s also becoming a way of modernising your business and attracting more people to your service.

Most contactless payments don’t have any additional processing fees, saving you extra money to spend on renovations, improving your products, and maximising customer experience. It also offers a more hygienic way of making payments, which helps both you and your customer.

Why should I use Netcash’s scan to pay process?

The answer to this is simple: efficiency. Not only is the setup simple and hassle-free, but Netcash also has a mobile app, billing options, and physical methods to receive payments with QR codes. Other benefits include:

• It’s cheaper and faster access to your merchant facility.
• The exact amount can be displayed on the customer’s payment app, without the customer having to type it in, which creates a more frictionless experience.
• Each QR code contains unique data, so other useful information can be recorded, like where the transaction is taking place.
• No need to deal with the onerous compliance requirements that come with storing cardholder data.
• Netcash also provides static QR code countertop stands as a backup in the case of power outages or systems being offline.
• Digital wallet users do not expose their cards to skimmers thereby eliminating fraud.

Additionally, Netcash’s QR codes work with all major banks and service providers in South Africa, such as: 

• Capitec
• Nedbank
• First National Bank (FNB)
• Rand Merchant Bank (RMB)
• Absa
• Standard Bank
• Telkom
• Vodacom
• Zapper
• QR Junction
• Spot

By Charles Pittaway, MD of Netcash

Now that the dust has settled after the pandemic, one of its most enduring legacies is the wider usage of mobile and contactless payments around the world. Global research from Accenture shows that more than half (56%) of consumers surveyed are using digital wallets. Although card and cash usage remains high across the globe, mobile payments are becoming the preferred option for many consumers.

Adoption has soared in South Africa, too, with consumers and businesses across the board looking for more streamlined, convenient and secure ways to transact. This has been spurred on by trends such as the rapid growth in card-not-present transactions, online shopping and omnichannel options like buy online, pick up instore.

With customers embracing a digital lifestyle, they increasingly expect companies of all sizes to offer them a choice of easy payment options. Mobile wallets are becoming popular with a customer who wants transactions to be quick and hassle-free. Mobile payments makes life more convenient because the customer doesn’t need to carry cash around or capture card details across multiple sites and apps.

To keep up with consumer expectations, companies of all sizes need to be able to support their preferred payment options. While mobile payment options such as scan-to-pay solutions are on the rise, some people still prefer to pay with cards or cash. Others may want to pay using instant or bank EFT, and some want to pay at a convenient venue like their local retailer.

Meeting the expectation of anywhere, anyhow and anytime payments used to be complex and expensive. In the past, the mobile payments landscape was highly fragmented. Businesses couldn’t easily support the numerous QR code and contactless payment options in the market, creating friction for merchants and consumers alike.

But the payments sector has since taken great strides towards standardisation and ensuring wallet interoperability. It has also become a lot simpler to accept QR code payments, without the need for special payment terminals, complicated integrations with accounting and point of sale systems, or steep monthly fees and transaction costs.

That has cleared the way for even the smallest businesses to accept mobile payments. The benefits are significant. The technology can speed up the checkout process and reduce the need to handle cash, which can save time and reduce errors. Customers can simply scan to pay for goods and services, making the process faster and more efficient.

Transacting via QR code is also more secure than using physical cards. Consumers are still effectively paying by card, even if they don’t need to present the plastic. As such, they benefit from the protections the card companies and banks offer consumers and merchants. Removing the physical card from the transaction reduces the consumer’s exposure to risks such as card skimming.

Mobile payments also help businesses to increase sales. A seamless checkout experience encourages customers to complete their transactions. Additionally, mobile payments can help businesses reach new customers who prefer to pay with their mobile devices. By accepting mobile payments, businesses can tap into a growing market of tech-savvy customers who value convenience and efficiency.

We’re just at the start of the digital and mobile payments revolution. Merchants that can support the customer’s expectation for a seamless and convenient payment experience across every channel will thrive into the future. Businesses will thus increasingly look for solutions that make seamless payments and acceptance a reality.

Payments are a key part of the customer journey and can help companies to attract and retain customers. Today’s fintech solutions enable merchants to simplify the movement of money in their business, from presenting bills and processing the payroll, through to accepting payments across nearly any channel or instrument—giving them an edge at a time digital payments are a way of life.

Mobile payments have come a long way and will continue to evolve towards anywhere, anyhow, and anytime convenience. Businesses of all sizes need to support their customers’ preferred payment options, including mobile wallets, to keep up with customer expectations. By doing so, they can increase sales, attract and retain customers, and simplify the movement of money in their business.

Established in 2003, Netcash is a payment solutions provider delivering debit order, salary and creditor payment services to South African businesses and organisations. The company provides multiple innovative and integrated online payment solutions that are efficient, simple, and cost efficient. Netcash is registered with the FSCA, PASA and is PCI DSS Level 1 compliant.

www.netcash.co.za

Liana Clarke: Liana.Clarke@Netcash.co.za