There can be no doubt as to just how significantly the world has changed in the past few months, as the COVID-19 pandemic and the global response to it alter the very fabric of how society operates. In a world of social distancing, sanitising and germaphobia, it is no surprise to learn that most people have changed their attitudes to any type of face-to-face interaction.
This goes double for the payment arena, as such payments inevitably mean handling cash many others may have touched or using a bank card that entails putting a PIN into a device by pushing buttons.
Ahmed Gani, Head of Business Analysis for Altron Bytes STS FinTech Division, explains that the FinTech industry is eager to develop solutions to help reduce face-to-face interactions, and where these have to occur, to have ways of avoiding having to touch machines while inputting a PIN.
“Ideally, you want a solution that enables you to make a payment to another person or entity, directly from your phone, via an app. This could be most effective in high-risk situations like paying for a restaurant meal, or a street vendor using it to accept payment from a customer,” he says.
“The two hurdles to overcome to achieve this are the human one and the security hurdle, although both have been given a boost by the pandemic due to the growing need for such solutions. Because it needs to be used, people are more inclined to accept new solutions and thus they soon become less fearful of and more trusting in these platforms as a whole, and are assured that the transactions are all above board and compliant.”
Essentially, adds Johan Gellatly, Group Executive: Altron STS, the requirement is for a solution that can act as either a credit or debit payment, but which is app-based and can thus also enable app-to-app payments.
“Something else that is vital – bearing in mind that the largest part of the market for such a solution is small traders, the unbanked and individual citizens – is to keep costs down as low as possible. Since an app-based solution should in many cases be able to avoid breaking into the SA payment platform, fees should more easily be able to be kept to a minimum.
“Of course, any such approach to payments will face its fair share of challenges too, not the least of which will be compliance with the country’s strict financial services regulations. Furthermore, another challenge will be to get people to pivot from the accepted method of payment, be it card or cash. Despite this, I have no doubt that mobile payments like this will be the next big thing,” he says.
Such a solution must be designed with the informal market in mind, as this is the sector that struggles with access to standard banking instruments. It is, he adds, also the sector where there is a greater risk when transacting in cash, both from exposure to potentially infected material and the more prosaic danger of being robbed. Of course, points out Gellatly, if one is able to get this right at the informal level, driving the same solution into the higher LSMs should prove easier, as the higher you go, the easier it becomes to gain traction around the adoption of new technology.
“Perhaps the biggest challenge facing the implementation of solutions that can reduce face-to-face contact in regard to person-to-person payments is the regulations governing the financial sector. While technology is well positioned to be able to resolve such issues, the regulations are often slower to be implemented, and because of how highly regulated the industry is, this means even those solutions that are ready to be implemented are held up by the law as it tries to catch up.”
“Nonetheless, that has not stopped the FinTech industry from putting enormous effort into creating solutions that can play their part in accelerating the development of the industry. After all, this is why we build the products we do – COVID-19 has just merely accelerated the development process and made the need for such solutions more imperative, as we seek new ways of mitigating the impact of the virus,” he concludes.
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