Two of the big-four banks have recorded strong growth in the use of virtual cards, as more South African consumers shift to digitally-driven payment methods.
Standard Bank says physical card uptake in 2020 slowed significantly, down over 50% from 2019. Meanwhile, the number of virtual cards issued grew by over 400% in 2020.
“We’re seeing a similar trend in 2021, with more than 24 000 virtual cards issued year-to-date,” says Arno von Helden, co-founder and head of Standard Bank’s forex app Shyft.
“Online purchasing, which has increased exponentially since March 2020 when the COVID-19-induced lockdown commenced, is a significant driver of this growth,” he notes.
Considered a “more secure” online payment option, virtual cards have grown in popularity in SA, with Standard Bank, First National Bank (FNB), Absa and Capitec having introduced their virtual bank card offerings for individual and business customers.
Von Helden points out that local consumers are using their virtual cards to make payments to international sites like Alibaba and Amazon, as well as manage their online subscriptions to publications like the Wall Street Journal or New York Times.
“While physical cards have undergone security innovations, consumers are still at risk for potential fraud and identity theft when they process a payment online or over their mobile phone. This is where the appeal of the virtual card comes in. Essentially, you can shop online without having to expose your credit or debit card details and top the card up with the exact amount you wish to spend.”
Standard Bank’s forex app Shyft, which lets Standard Bank and non-Standard Bank customers buy, send, sell and spend foreign currencies, also offers the ability to create virtual cards in rands, US dollars, euros, British pounds, or Australian dollars.
Von Helden adds the ability to create multiple virtual cards for various currencies is the driving force behind the high uptake of the forex app. “With Shyft, you can link up to 10 virtual cards per currency for managing multiple subscriptions or various categories of spend.”
Similarly, FNB says its individual and business customers have processed over R1 billion in payments using virtual cards on the FNB and RMB Private Bank apps.
While it was announcedlast July, FNB officially introduced its virtual bank card in January, as the bank expands its digital payments ecosystem.
“We’re delighted to see our retail and commercial customers leading the adoption of alternative payment methods in South Africa,” says FNB payments executive Raj Makanjee.
“It’s particularly pleasing to note that this substantial value of payments was recorded in just nine months to mid-September 2021 on approximately 500 000 FNB and RMB Private Bank virtual cards.”
Chris Labuschagne, FNB card chief executive, adds: “Factors such as COVID-19, safety and convenience play a major part in consumers’ decisions about where to shop and how to pay. This is why we provide a wider choice of payment options for our customers to manage their lives and businesses as they deem necessary.
“The flexibility of our virtual card is such that it can be used for online shopping or at a point of sale in a physical store to minimise contact with surfaces. Virtual cards are also increasingly preferred by customers who have recurring payments and subscriptions.”
FNB and RMB Private Bank customers can activate and store multiple virtual cards on their apps.
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