With heightened awareness around hygiene and safety, more individuals are turning to these solutions as they look to avoid the handling and exchange of physical cash due to the risk of contamination.
“We are witnessing a shift in behavior in the area of payments,” explains Andrew van der Hoven: Head of digital banking at Standard Bank “With concerns over cleanliness, customers are opting to rather make payments via online banking and mobile app banking or by using the tap-to-pay functionality when paying for items in the physical store.”
Even before the virus made its way to South Africa, digital and contactless payments were on the rise. These payment methods have shown significant growth over the last 12 months. Standard Bank’s popular mobile payments solution app SnapScan, for example, recorded annual turnover growth of around 65% in 2020.
Further to that, Standard Bank has observed growth in contactless spend on both credit and cheque cards. Contactless payments now make up around 15% of overall credit card spend, up from 3% in 2019 while contactless payments on cheque cards account for around 12% of overall spend, up from 5% in 2019.
“The rate of adoption is encouraging and demonstrates the evolving consumer need for digital solutions to transact,” explains Van der Hoven. “Enabling fast, frictionless and safe payments is key, especially in the current environment where there is a reluctance to deal with cash.”
Engagement on Standard Bank’s digital and mobile banking app channels, which are key to facilitating contactless payments like the purchase of electricity and data, has also grown significantly.
In 2019, clients spent just over R200 million on prepaid electricity via the app and this spends increased by over 100% year-on-year. The value of prepaid data transactions on the app has also increased by the same amount over the same period.
Meanwhile, Standard Bank has seen an increase in the use of its virtual cards, which can be accessed and set up via the mobile app. Clients can select from a range of digital cards to make purchases online with popular e-tailers like Takealot and Zando without having to expose their credit or debit card details.
The cards offer the ability to top up for online purchases or physical cash withdrawal. This gives users peace of mind that over-spending will not happen on the card. South African consumers are realizing the benefit of this, especially as they become more comfortable with the world of e-commerce.
Transactions made using virtual cards amounted to around R2 million in 2019 and we will continue to see the growth in the numbers due to the new normal under Covid-19.
South Africa, like most countries on the African continent, remains a cash-based society. The virus has however brought concerns around the handling and exchange of physical cash and this is helping to accelerate the move to a more cash-free environment.
“We know that COVID-19 will be with us for the foreseeable future and risks around hygiene will not go away any time soon. This means that we could possibly see a more sustainable and permanent shift to contactless solutions going forward.”
Van der Hoven adds that the benefits of contactless solutions extend beyond health and safety. “Contactless payments offer a secure way to purchase goods and services. Further to that, businesses that adopt these methods can access a wider customer base as it enables them to accept payments from anywhere else in the world.”