Digital payments: A catalyst for South Africa’s growth
By Mpho Sadiki, Network International Group MD – Africa Acquiring, and Richard Kadiaka, Network International Regional MD – Southern Africa and Palops.
Across the world, the business community watched the SA elections with great concern as to how the outcome will affect sentiments and the ability to do business in South Africa. The known structural, economic, policy certainty and governance challenges created a challenging operating environment for business and therefore the seventh elections of our democracy provided a good opportunity to reset. The lack of an outright majority winner has itself presented some unknowns for all observers and the entire nation.
The dawn of the Government of National Unity (GNU) in South Africa has ignited a renewed sense of optimism among businesses, particularly global investors. This shift presents a unique opportunity for a more collaborative approach to economic development. One critical area ripe for innovation and growth is the field of digital payments, which holds the potential to revolutionise the informal sector and empower young entrepreneurs, thereby boosting economic growth and creating new jobs.
A call for inclusive financial services
The GNU’s openness to new collaborations marks a significant change from the previous single-party administrations. This new approach aligns with the shared objectives of the country, including the development of an inclusive payments ecosystem. The South African Reserve Bank’s Digital Payment Roadmap, part of Vision 2025, and the proposed activity-based licensing under the COFI Bill are pivotal steps toward creating a conducive regulatory environment.
This for us, creates the platform for true innovation and true scale in endeavours to be financially inclusive. It opens the door for non-banks and fintechs to accelerate their initiatives into digital payments and actual services finally reaching the informal and cash-heavy segments of our market.
Our challenges with cash-handling operations and risk associated with this is a major concern for South Africa as a country and could not be a greater motivator for accelerating digital payments with aggressive acceleration.
Industry landscape: The role of digital payments
In many cash-dependent societies, the lack of digitisation leads to missed opportunities for data insights. Digital payments not only promote financial inclusion but also provide valuable data that can inform government policy, inform product innovation and drive economic growth. The expansion of payment options can significantly accelerate the adoption of digital payments.
Network International as a leading payments enabler across Middle East and Africa has seen the positive impact of in successful implementations of Alternative Payment Methods (APMs) like mobile money acceptance at Point-of-Sale, or of late, the acceptance of UPI and AANI wallets in the UAE market enabled through Network International. We have seen the staggering uptake from Indian visitors to the UAE.
Multi-tender acceptance plans are critical in ensuring that merchants can accept payments at the point of interaction with the customer without preference. There is great industry excitement in the next launch of Request-to-Pay (RTP) for PayShap which also introduces new customer payment methods for example Person-to-Merchant (P2M).
Readiness for hyper-scale payment platforms simplifying entry to payments
Network International made a staggering R560mn investment in the SA market in 2023, a decision driven by the market appetite for leading payment products, high card adoption compared to other market in the MEA region, regulatory readiness and requirements for an on-soil relationship (a great hub for support institutions across the SADC region).
We have witnessed the transformative power of digital payments and best of breed technology offering based on the response from the market, new partnerships established and the enhanced desire from industry players to collaborate.
Our experience in facilitating seamless digital payments enablement across the Middle East and Africa has showcased potential and competence to deliver for similar initiatives in South Africa. If we are to accelerate adoption of digital payments, collaborative efforts are crucial for achieving the common objective for true financial inclusion.
Even more exciting, we have seen a growing intent from non-financial service providers like mobile network operators (MNOs), retailers and fintechs looking to take advantage of our role as a leading enabler of payments and commerce to launch their key payments capabilities in the market. By partnering with these new players in creating an interoperable payment environment, we aim to equip small entrepreneurs and informal segments with the tools they need for accelerated growth.
Skin in the game for a socially responsible payments industry
We see our role as a catalyst for growth, supporting innovation, testing new concepts, and enabling fintech collaborations. Payment platforms lower the barriers to innovation, even for those constrained by legacy infrastructure, and serve as conduits for successful business collaborations.
While there is restored optimism through the newly formed GNU, the industry cannot afford to be passive. There must be collective efforts to create capacity, accelerate collaboration and a desire to accelerate policy implementation. As we look to the future, we are confident in the direction set by the South African Reserve Bank and the increasing interest from both fintechs and large enterprises. This positive trajectory not only reinforces our commitment to our local operations but also encourages us to invest in meaningful social initiatives, skills development programs, youth employment and other initiatives such as staff ownership programmes.
Socially responsible corporate citizens are critical to a conducive and ever-growing payments landscape. It is our responsibility to invest in the industry as much as we benefit from it. Our achievement of level 1 B-BBEE accreditation is our way of showing full and ongoing commitment to the social and economic objectives of the country.
In conclusion
The key to sustained growth and innovation lies in the trust and collaboration between the public and private sectors. When businesses are confident in a country’s future, they are more likely to engage in significant social investments and industry collaborations, creating a fertile ground for innovative solutions and further investment.
