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FlickPay, Snapscan and Zapper might sound like a foreign language – yet these are the apps used by a fast growing group of consumers in South Africa who have bought into the world of mobile payment. Mobile phone providers, merchants, financial institutions and consumers represent the fast-growing ecosystem centred on mobile-linked banking, a facet of today’s society that continues to gain popularity.
Experts in the financial services space (and convergence with ICT) agree that mobile transacting has developed, is now a reality and has found mainstream application. The days of thick wallets, heavy purses and paper-based transactions are fast disappearing.
Innovation centred on mobility and integration with financial systems makes it possible for consumers to pay for goods and services via their mobile phones. It also enables merchants to offer customers the benefit of an inter-connected system and add more value and convenience to their services.
By Fritz Milosevic – dotadvisors
Solution developers are working round the clock to attract and educate the consumer and take up a leadership position in what is widely considered a market rich with opportunity and potential.
This work has resulted in the introduction of mobile payment apps FlickPay, Snapscan and Zapper, all of which have taken up a strong position as primary consumer offerings.
Each has its advantages and disadvantages, and specific technical features. But, what they do have in common is the impact they have had and continue to have on the financial behaviour of consumers. Due to the fact that transactions are now being facilitated in real-time from any location via mobile apps, businesses now have a clear opportunity to focus on consumer behaviour and identify patterns in order to adapt services accordingly with a view to creating additional revenue streams.
Judging from the recent activities by these companies it seems to be clear that trying to enter the payments value chain from the consumer-side is considered as the best strategy to capture margins further down the chain later on.
After testing the mentioned apps for a while, we can say that all of the offerings work well and operate without a glitch. They are fast… payments go through in no time, including confirmation messages. No more waiting for the old, tired card terminal to connect to the bank and approve the payment.
However, there are some distinct differences – particularly when it comes to factors like the amount of merchants connected to each offering, level of security, the number of cards that the app can facilitate and feature functionality.
FlickPay stores the details of one card. Zapper and Snapscan allow multiple cards, which is a great advantage because the user can pay for either business or private expenses with the various cards. However, it is safe to assume that FlickPay is working hard on adding this feature soon.
FlickPay works opposite to its industry counterparts and scans a code that the consumer generates on his phone (in the app). For that the merchant needs to use either a smartphone with camera and app or a dedicated camera connected to the PoS till system.
Zapper and Snapscan on the other hand use a merchant QR code, which the consumer then scans. This means that Snapscan and Zapper do not require the merchant to have any hardware, other than a basic phone to receive a confirmation SMS of payment completed. There is less hardware involved and less room for failure. Hence a more suitable solution for informal traders at this point in time.
Snapscan has quantified its merchant base at around 12,000. Given its increasing application within sectors such as public transport (meter taxis) and informal trading, this offering certainly appears to be gaining traction. We believe it to be currently the most secure mobile payment app – the user and device has to be registered and a PIN is required for every payment.
Interestingly, the benefits and advantages of using mobile payment apps seems to be lost sometimes to merchants, as they are more concerned about the transaction fees itself. Since they are the same as for swiping the card, an argument like reduced hardware cost (no purchase or rental of card reader/ terminal) is dissipating.
What is certain is that the mobile payment is seen as a catalyst to reduce the gap between the banked and unbanked communities.
Compared to the global trend of using mobile phones for banking, payments and transactions, South Africa probably is at an advanced stage with good user adoption rates and a vibrant eco-system of banks and non-bank start-ups competing for the attention of early adopters, winning them over for using mobile payment apps.
Conclusion
We see non-bank players trying to capture a slice of the revenue in the payments value chain by leveraging advantages such as higher risk appetite, a more innovative culture and better understanding of consumers’ digital needs and habits. Banks on the other side have the resources, experience and infrastructure to scale the mobile payments business.
In future, mobile payment apps in connection with mobile wallets (i.e. m-pesa) have great potential to enable the unbanked, or better “un-carded”, to use the same secure and convenient payment method that the comparatively smaller part of SA’s population enjoys using at the point of sale since a long time.
Overall, new mobile payment apps mean no short term risk for existing players in the payments industry, but certainly have the potential to make an impact, given that the fast growing smartphone penetration drives user adoption.
