How consumer needs are changing

South Africans are becoming ever more comfortable with non-cash payment options. These can range from mobile electronic payments to real-time payments. The most popular options are Buy Now Pay Later (BNPL), such as Payflex, and digital wallets. Digital wallets such as Samsung Pay, Apple Pay, and Google Pay allow customers to simply tap their phones or smart watches as a payment method.

A big reason BNPL has grown so rapidly is that it promotes financial inclusion in South Africa. BNPL offers every South African the opportunity to participate in events like Black Friday sales, for instance, regardless of their socioeconomic background.

How retailers are adapting to meet demand

Retailers worldwide have seen a decrease in in-store purchases and cash payment methods and a radical increase in online purchases and the online transactions that accompany them. 

Making your choice of the right eCommerce platform is a vital one as it will offer an all-in-one solution for multiple modern payment options.

Another way retailers have adapted to meet clients’ demands is by offering in-house BNPL solutions. Alternatively, companies have also partnered with established credit providers such as Payflex and PayJustNow.

The four methods of payments you need to offer your clients to stay relevant

We briefly touched on these a little earlier. But now is the time to get intimately familiar with these payment options, as they will serve as the future lifeblood of your eCommerce business. Each one of these options has already shown to be popular with consumers. So, let’s take a look at what each option is, how they work, and what made each one popular.

Contactless payments

What are contactless payments? The most popular version of this payment method is the tap-to-pay functionality on your bank card. The card machine and cards usually have a Wi-Fi symbol on them to indicate that they are capable of processing this kind of payment.

According to bizcomunity.com, a staggering 75% of South African consumers use contactless payment methods. Additionally, 45% of Mzanzi consumers say that they have swapped out their old bank card for one that offers contactless payments, and this is evident in the surge in the use of PayShap in 2024.

These numbers make it extremely clear that consumers are looking to ditch cash as a payment option. Contactless cards are more secure and convenient for customers as they use a one-time, unique digital code to facilitate secure communication between your card and the machine.

Mobile payments

Mobile payments are the next most popular payment option for customers as it doesn’t require anything other than their cell phone. Equally as convenient and possibly more secure than contactless payments, mobile payments are also a simple tap on a card machine, but with your phone.

Your payment data is securely stored in an encrypted digital wallet on your phone. As briefly mentioned earlier, these wallets are powered by some of the tech world’s biggest companies, such as Google, Apple, and Samsung. The biggest draw to this payment option has to be that if you forget your wallet at home, you can just tap your phone.

Of course, there are other digital wallet apps that have made paying faster and easier, such as Zapper, FlickPay, and Masterpass. LinkedIn reports that a GSMA survey has revealed that these apps and wallets are empowering up to 477 million Africans to make fast, convenient, and secure payments.

Digital payments

Digital payments can refer to any kind of payment in this list, but for all intents and purposes of this guide, this section will focus on crypto wallets and the meteoric rise of cryptocurrencies.

Crypto wallets such as Meta Mask are an absolute must when dealing with cryptocurrencies, as they are the bridge that allows consumers to spend their traded or mined cryptocurrencies.

According to statistics done by Triple-a, 86% of South Africans are aware of crypto in some capacity, and a whopping 46% of South African crypto owners have more than R10,000.00 in crypto assets. Consumers love crypto because it offers them anonymity as well as several layers of security that Fiat currency just can not offer.

The benefit of supporting cryptocurrency for retailers is that cryptocurrency spenders are usually more wealthy, as the technology has few barriers to entry for consumers with lower incomes. By supporting crypto wallets in your checkout process, you can accommodate customers who may be willing to spend a little more than your average client.

Buy now, pay later

Buy Now, Pay Later is perhaps the fastest-growing alternative payment method in South Africa. The previously mentioned alternative payment solutions all have some sort of technological requirement, whether that is cutting-edge card tech, the latest smartphone or watch, or a working knowledge of cryptocurrencies.

BNPL, on the other hand, even offers a new way to pay for those Mzanzi residents who opened their bank accounts decades ago and haven’t upgraded anything. The only requirement is a minimal amount available in their South African bank accounts or credit cards.

The more appealing aspect of BNPL is that it empowers customers to buy items they vitally need right now without necessarily having the funds available. Not offering a BNPL option will only serve to harm your business in the long run, but by offering one, you can smash your eCommerce goals.

Imagine the following scenario: Jane Doe has a very important interview for a new job, but her webcam broke, and she doesn’t have the funds to replace it, but she would if she got this job. What a paradox, right?

Now, imagine she comes across your killer eCommerce store, and you offer her a BNPL option. Not only will you make a sale, Jane will see your company as a lifesaver and undoubtedly return with more business.

Voucher payments

Voucher-based payments have been around for a long time, and especially in South Africa, it’s a popular payment method for millions of people. There’s no getting past the rapid push for digitalisation worldwide, and to match this call, voucher payments are proving their worth to eCommerce businesses.

At its core, this method of payment functions on a basic methodology. During an online checkout, your customer simply selects to pay via voucher. 

Depending on the voucher brand selected, they are then presented with a voucher code that can be printed or displayed on a mobile device (such as SCode). Using a similar service, such as 1Voucher at checkout, with the physical, preloaded voucher’s unique code online will result in it being debited in full or in part.  

Keep in mind that voucher payments are at the forefront of hybrid payment solutions, and options are widespread, like Flash 1Voucher or OTT.

3. Blockchain technology’s popularity will continue to grow

One of the fastest emerging payment trends is that of blockchain technology. You have already learnt about how quickly Cryptocurrencies are being adopted by consumers and the benefit of catering to those clients, but are there any downsides? 

Yes, there are a few. The biggest is the volatility of a given crypto coin’s value. Bitcoin and Ethereum are the most popular coins and lead the charge as payment options, but they can drastically change in value overnight. The next issue facing cryptocurrencies is the severity of regulations they are facing or, in some cases, the lack of regulations around them.

That being said, the e-gaming sector has seen massive growth in how people play and bet on sites that support blockchain payments. Lighting the way for their eCommerce counterparts to include them as payment options during checkout.

4. Digital identity infrastructure will become a priority

Consumers are always looking for their payments to be more secure. In an ideal world, payments should be completely free from the risk of payment fraud or identity theft. Unfortunately, the current payment processes are fragmented and inconsistent, leaving consumers and retailers frustrated.

Moving forward, the payment world is seeking to overhaul how they authenticate digital IDs and make payments as secure and frictionless as possible in the 4.X payment era. The private sector is not the only one working on this, though.

Even governments have stepped in by launching national identity initiatives which make creating digital IDs mandatory. Countries such as Australia, New Zealand, and Canada have already or are in the process of legislating these initiatives.

5. Biometric authentication will replace PIN codes

Another security-driven trend is that pin and signature authentication is set to be replaced by biometric authentication methods. This will allow clients to use their faces, fingerprints, or voices at the point of sale instead of punching in a pin or signing a receipt.

These measures will also be able to be implemented in digital stores as consumers continue to purchase more and more online on devices that have biometric systems built into them. KBV Research estimates the global contactless biometrics technology market size will see a compounded 19.1% increase by 2026.

9. Augmented reality (AR) is set to expand as brands look to offer new experiences for shoppers

As Gen Z becomes a more dominant buying force, online sellers have needed to look at some new innovative window-shopping and buying experiences for the tech-driven generation.

That is where VR and AR, that is, virtual reality and augmented reality, come in. These technologies allow stores to offer similar experiences to brick-and-mortar stores but in the comfort of a consumer’s own home. 

Adopting these technologies will help businesses bridge the gap between traditional sales and making purchases in virtual gaming worlds, which Gen-Z is more accustomed to.

10. Business models such as PaaS and data-based APIs will continue to rise

Traditional revenue models are becoming less and less profitable for financial institutions, forcing them to seek new revenue streams. Each and every bank and financial institution will need to create strategies that leverage data-based APIs and open banking.

The 4.X payment era has made streamlined APIs and the monetization of data the top income streams for banks. This means banks are being forced to invest in new data-led services. 

Furthermore, banks need to lower capital expenditure whilst increasing flexibility and the ability to offer new functions. These need to include payment schemes and clearing access, alongside launching new products faster.

For example, Klarna is a Swedish financial tech company that offers payment plans popular with younger consumers. These plans include social shopping and finance. Klarna recently partnered with Simon, the largest shopping centre operator in the US.

This business collaboration gives Simon shoppers access to Klarna’s unique in-store payment solutions, making it easier for them to pay and crucially driving younger shoppers to the malls.

Final thoughts on the future of digital payments

The world of payments has developed at glacial speeds up until 2020. The pandemic kicked off a lightning-fast race to develop fast, secure, and simple payment methods. Keeping up with this segment of business may prove to be tricky, but you can cut out all of the stress by subscribing to Netcash’s best-in-class payment platform.