Large-scale shift to digital payments on Black Friday

South African banks witnessed a surge in digital transactions during the just-ended Black Friday weekend.

South African consumers, taking advantage of Black Friday deals, made the shift to digital and contactless payments.

First National Bank (FNB) says on the day, its customers made purchases worth over R3 billion − the highest Black Friday spending reported by the bank in the past four years.

It notes that over R2.4 billion was spent in-store (card-present), whereas over R670 million was for online shopping (card-not-present).

FNB Virtual Cards also saw a significant increase in spending, accounting for over R137 million in purchases compared to R36 million during 2021 Black Friday, a 280% increase, says the bank.

“In a market where consumers are seeing an increase in the cost of living, many were always likely to take advantage of Black Friday deals,” says Chris Labuschagne, CEO of FNB Card.

“As anticipated, the most popular spending categories − including travel and transportation, groceries, clothing and entertainment − experienced a robust recovery.

“The increase in travel is especially encouraging, given that many consumers were unable to travel in the past few years due to global travel limitations, and it augurs well for the South African economy as the festive season approaches.”

Ashley Saffy, head of business development at FNB Card, notes customers are increasingly choosing safer and more convenient payment methods, such as using their virtual cards for online spend, and doing contactless card and device transactions for instore purchases.

“The value of online (card-not-present) spend increased by 31% compared to the same period last year, while in-store (card-present) spend increased by 18%. It’s also encouraging to see that contactless payments increased by 36% compared to last year’s Black Friday, demonstrating that customers are becoming more aware of convenient and safer payment methods, whether they shop in-store or online,” she adds.

Standard Bank says it saw double-digit volumes of transactions increase in both card-not-present and contactless payments over the Black Friday weekend, extending the growth trend in digital payments spurred on by the impact of COVID-19 restrictions.

In a statement, Standard Bank says COVID-19 preventative measures meant many consumers opted for digital payment options when making their purchases, significantly boosting e-commerce.

It says the ongoing adoption of these alternate payment methods by consumers speaks to the convenience and safety of these digital options.

Over the course of the Black Friday weekend, online purchases by Standard Bank customers increased almost 19% when compared to the previous year, exceeding the 15% growth recorded in 2021.

Customers using contactless payments and tapping their cards at a point-of-sale surged more than 31% when compared to the previous Black Friday weekend, topping the 25% growth of the previous year, the bank says.

Ethel Nyembe, Standard Bank head of group card, says: “Customers are seeing the value that digital payments offer. Safety and convenience are the key factors that have led to the fantastic growth trends we are seeing in online and contactless payments. And this convenience is continuing to evolve.”

Standard Bank saw a 20% increase in the number of transactions processed over the weekend when compared to the year before, and a 22.5% increase in the value of purchases over the same period.

Volumes increased to 8.6 million transactions processed over the weekend.

Nyembe says: “Customers have been very selective this year. The high interest rate environment, continued muted growth in the economy, and valuable lessons learnt from previous economic shock cycles have made consumers far more selective and cautious when taking on debt. We continue to urge customers to shop responsibly as we exit the Black Friday weekend and head into the festive season.”

Even the challenges of increasing inflation and the prospects of continuing interest rate hikes could not dampen the enthusiasm of South African consumers for the extensive deals laid on by stores across the country over Black Friday weekend.

This is according to Privesan Naidoo, executive of trading products at Nedbank, who says the bank saw a notable year-on-year increase in overall acquiring volumes on Friday, 25 November.

“Nedbank acquiring volumes on Black Friday itself increased by a significant 38% from the levels we saw in 2021.”

According to Naidoo, Black Friday weekend also served to further embed the shift by South African consumers towards digital payments and online shopping.

He says the bank’s data reveals a year-on-year increase of 88% in online transactions on Black Friday, with physical purchases rising by 30%. Contactless payments saw growth of 39% between 2021 and 2022.

Considered over the two-year period from 2020 to 2022, these spikes are even more dramatic, going up 73% and 52% on each of the days, Nedbank adds.

“These figures point to a growing preference for the convenience and safety of contactless payment methods like Nedbank Tap-and-Pay and Tap on Phone, as well as the numerous third-party contactless payment options,” Naidoo says.

Tshipi Alexander, head of card issuing at Absa Everyday Banking, notes Black Friday once again proved to be popular among shoppers, and was underpinned by the fact that many large South African retailers opted to trade from midnight in order to give customers more opportunity to capitalise on specials.

“This positive growth trend continues to show South African consumer resilience since the relaxing of lockdown restrictions and marks a return to volumes last seen in pre-COVID times.

“However, it is important to note that previous Black Fridays fell after the majority of salaried customer pay-dates, specifically the 25th of each month, while Black Friday 2022 fell on this customer pay-date,” comments Alexander.

“Using this reference point provides crucial context when comparing volume information from previous years.”

While Absa is yet to conclude a final round-up of the Black Friday period, he says initial indications are that transaction volumes for Absa-issued cards grew significantly, with credit card spend up by 17%, with peak time spending reaching a 51% increase from last year.

“Furthermore, the single largest local transaction, as well as the highest amount spent by one Absa customer was R500 000.”