A new study by technology market researcher World Wide Worx has found that Nedcor has established a clear lead in the online transaction processing environment.
World Wide Worx says a fierce competitive battle has been waged in SA over the past six years for control of the stretch of e-commerce between the click of a buy button on a Web site and the conclusion of the transaction in the merchant`s bank account. It says this online transaction processing environment has become a critical area of competitive advantage for banks attempting to attract merchants to their merchant acquiring services.
The "Online payment facilitation in South Africa, 2002" report released this week shows that Nedcor has established a clear lead in this environment, followed by Standard Bank.
"Since the birth of e-commerce in 1994, numerous systems have been devised for processing payments online," says World Wide Worx MD Arthur Goldstuck. "As the e-commerce industry prepares to enter its 10th year, there is still no standard system or product set in use across the board. We believed it was time to study this arena, and demystify the way it works."
The report focuses on online transaction processing between the merchant and the bank or credit card company, and does not cover the systems in use for consumers. According to the report, homegrown products dominate the market, with a few foreign partnerships and imports also playing a role. Nedcor leads the field in number of merchants acquired, the majority of which are acquired through iVeri transaction processing, while Postilion, a system for switching online transactions to a bank through a proprietary network (ie not across the Internet) has increased Nedcor`s market share as a result of its use by newly acquired subsidiary BoE.
Standard Bank is the second biggest player in this environment, while FNB and Absa have strong positions, but still lag far behind. The total market consists of little over 1 300 merchants using online transaction processing systems in SA. This number has come down significantly in the past year, says Goldstuck, as banks "cleaned up" many of the dormant merchant accounts that had been opened during the technology stock market bubble of the late 1990s.
The survey does not include online banking or electronic bill payment and presentment, which form the subject of a separate study currently under way. It defines online transactions as those payments specifically initiated through the use of a payment instrument such as a credit card to make a purchase.
According to the report, the key to the success of online transaction processing systems lies in the extent to which the solutions are geared towards acquiring the best merchant mix possible, within a bank`s strategic parameters. Depth of the solution provider`s relationship with the bank is a critical aspect, but must go hand-in-hand with width of product environment and breadth of transaction type. The leading providers have shown that they are able to meet all three of these central criteria.
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