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Emerging payments keep SMEs afloat

Article provided by Nedbank

As the country faces a third and (potentially a fourth) wave of COVID-19 with associated lockdowns; even more South Africans are adopting entrepreneurial mindsets. However, with this comes a greater need for small- and micro-business support in the form of flexible and adaptive business tools and innovations such as mobile on-the-go payment solutions. Chipo Mushwana, Executive of Emerging Innovation at Nedbank, explores the potential impact of emerging payment innovations on the South African economy.

Before the devastating COVID-19 pandemic, small and medium enterprises (SMEs) in South Africa, particularly in the informal sector, were quite comfortable to rely on cash as their primary means of trading. In fact, a 2019 Deloitte report said that ‘cash usage continues to grow in the South African economy, at a rate of 6-10% per year, ahead of inflation’.

Although 80% of South Africans have a bank account, most consumer transactions are still cash-based. The report raised concerns that the market had a monumental task in educating people about the risks of cash and the benefits of electronic payments.

Since the arrival of the virus in March last year, huge swathes of the economy have disappeared overnight, along with thousands of jobs. More are likely to be impacted with the latest set of restrictions.

Those that remain not only had to ensure that they sanitised their spaces in often cumbersome ways, but many also had to offer their customers alternatives to cash payments overnight.

While larger businesses could justify the investment in expensive point-of-sale (POS) terminals, some costing easily over R3 000, this was not an option for most.

More prohibitive than the upfront cost of the device itself are the monthly subscription and credit card processing fees, which merchants must bear for each transaction. For businesses such as restaurants and hotels there is the added cost of a POS management system, which manages things like bookings and communicates orders from the front of the house to the kitchen.

With unemployment now at its highest level on record, many South Africans have even dipped into their retired savings just to get by. While starting a new business, investing in a traditional POS can be too burdensome for some.

In this climate, the financial services sector had to develop flexible, easy-to-use payment solutions that empower small-scale traders, SMEs and new entrepreneurs without breaking the bank.

This is what compelled Nedbank to develop an emerging ecosystem of platforms that enable merchants to turn their cellphones, which they will already have anyway, into payment acceptance devices.

Centred around the Money Message and tap-on-phone platforms, this new environment radically eases the need for cash as a means of trade, and even allows for remote payment.

Tap-on-phone is an easily downloadable app that has empowered hundreds of merchants and business owners to date with the ability to accept card payments without having to buy point-of-sale (POS) devices. These merchants include beauty parlours, hairdressers and car washes.

The functionality enables secure, contactless payment acceptance, and there’s no health risk to the merchant or customer.

Merchants can receive electronic payments without having to invest in costly hardware such as a POS device or fixed data or telephone lines before they can start trading.

Similarly, the Money Message platform lets SMEs and their customers conveniently receive and make secure in-chat payments via WhatsApp remotely.

The business owner sends a request-to-pay message to the customer and first-time users, and they then receive an SMS asking them to register for the service. The customer enters their name and surname and registers their card details. Customers can then make secure, cardless payments via their cellphone numbers or QR codes.

Within this ever-evolving ecosystem of payment alternatives to cash, the financial sector, especially in Africa, continues to build powerful tools that equip both consumers and business operators using existing technology. As more of these platforms become available, even technology-phobic consumers will grow increasingly comfortable buying and selling digitally.

While it will be a long time before cash is ever done away with, SMEs and traders at all levels now have access to practical solutions to run their businesses while keeping costs down in a secure online environment that also contributes to saving lives.

For more information about tap-on-phone, as well as innovative merchant solutions, go to

To register for Money Message, simply save the platform’s number, +27 (0)87 240 6272, as a contact on your phone and start a chat in WhatsApp by sending the word ‘Hi’.

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