What will it take for Payshap to succeed?

How innovation can accelerate the redundancy of cash in South Africa

The adoption of PayShap

There has been robust adoption of SARB’s rapid payment programme, PayShap, according to the banks that currently facilitate the payment service. However, barriers such as high fees still prevail, and banks like Capitec, South Africa’s biggest digital banker, have yet to facilitate the service for their 20 million customers. Because of this, PayShap has far from saturated the payment landscape of South Africa. What should still be considered for PayShap to replace cash?

Continuous improvements

Each country has its nuances and incentives for pursuing a digital cashless economy, however there are some clear parallels to maximise the chance of success.  Looking beyond the early adoption and traction, one needs to consider the continuous improvements in key areas to foster the longevity of solutions and adapt during the journey to bank the majority.

Firstly, network availability in informal and rural areas is a common issue limiting the ability to transact without cash. Uniformity in the pricing between banks will also help build trust and confidence in a sceptical user base.

Innovation beyond just payments to widen the ecosystem and bring new products and solutions will help accelerate instant-payments as the default choice of payment in the country. Things like paying with proxies, or request to pay, and other functionality which would make daily transacting easier are good entry innovations.

“Innovation beyond just payments to widen the ecosystem and bring new products and solutions will help accelerate instant-payments as the default choice of payment in the country.”

The inclusion of FinTechs and telecoms will also drive more innovation and diversity in the marketplace. Layered services on top of PayShap for merchants and businesses to help scale and manage their businesses will be key.

For example, products to help merchants with inventory management and gain insights into customer trends are some obvious features that have made an impact in other rapid payment eco-systems. Collecting and leveraging data in these early days to guide products and features for both individuals and merchants will ensure the right products are built that add real value.  These features could be offered within the ecosystem or upsold as add-ons, either way, data should be the driving force behind offerings that would make a difference and add value.

And lastly, financial education should be at the heart of any initiative to accelerate adoption and remove the fundamental fears the average South African person may have.

What are the next steps for PayShap?

Innovation is unsurprisingly the essential ingredient to success for PayShap, and with established rapid-payment eco-systems around the globe providing good reference for inspiration. SARB has recently upgraded South Africa’s bank notes too, with enhanced security and fresh designs. With the intention of protecting the currency’s integrity, improving security, and maintaining public trust, its clear SARB does not expect cash to meet redundancy soon.   

What will it take to successfully digitise the economy?

In our newest publication we explore what the future of payments looks like for South Africa. What can smart phones offer to accelerate the adoption of digital payments? What can we learn from global markets? And what does industry need to succeed in digitising the economy?

Read more by downloading the publication below.