PayPal, the granddaddy of online payment systems, has had a checkered track record in South Africa since it partnered with First National Bank, and is probably the best demonstration of the constraints placed on these innovations by the country's banking system.
I think it will be a game-changer, especially because it will remove major hurdles for the smaller merchants.
PayPal's value as an online payment and money transfer service has been hampered somewhat by regulations requiring that it have a local banking licence, or partner with a local bank. And although the terms of use have been adapted since it was first introduced three years ago to enable non-FNB customers to receive funds into their bank accounts, this process is still far less simple than it could be.
Combined with delays in enabling transactions in local currency, PayPal has performed both well and not as well as anticipated, says Chris Savides, GM for FNB PayPal Services at FNB Complementary Online Services. He says around 7 000 South African accounts have been registered to date, with the local merchant base growing.
The merchants are an important component in PayPal's drive to grow its user numbers, as a larger base supporting PayPal payments will lead to a larger base of buyers.
Savides believes the ability to trade in local currency, which is expected imminently, will result in another spike in registered users.
"I think it will be a game-changer, especially because it will remove major hurdles for the smaller merchants," he says. He expects new registrations will come mainly from the newer merchants looking for a quick and easy solution, while more mature operators may offer PayPal as an additional payment option.
Looking to the future, Savides says PayPal will be trying to develop certain verticals, such as agri-tourism in which it sees opportunities for hunting tours that attract international visitors. It will also be looking to drive closer integration and use of sister services such as eBay.
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