Major changes in South African payments market
Webteam: 1st August 2014 5:09pm
South Africa's payments market is undergoing major changes as the country moves towards becoming a cashless society, according to a new report by the Lafferty Group.
Cash remains the main method of making payments in South Africa but the usage of payment cards continues to increase as improvements in card acceptance infrastructure and technological advances help consumers to leave banknotes behind. The value of banknotes and coins in circulation as a percentage of GDP dropped from 6.4 percent in 2008 to an estimated 4.5 percent in 2013.
Technological development is key to the growth of payment card transactions in South Africa with major players focusing on initiatives to drive the use of digital and electronic platforms for transactional banking. Some of the major technology advances introduced in the country during 2013 and 2014 include FNB's Slimline ATMs and Absa's Pebble mPOS terminals.
Growth comes despite the fact that South Africa faced one of the worst payment card malware attacks in its history in 2013, as a variant of the Dexter Trojan virus infected POS systems in thousands of shops, restaurants and hotels. According to the Payments Association of South Africa (PASA), the fraud caused a loss of about $2 million. The first signs of Dexter malware fraud in South Africa were noticed during the first two months of 2013. The malware skims data from a card's magnetic stripe, which can then be used to create counterfeit cards. The South African government has appointed a new advisory body to help with online security and cybercrime policy and technical issues.
"South Africa's dynamic and changing demographic profile of people in the labour market and its burgeoning black middle class represent a new base for card expansion and an opportunity for increased market penetration." said Phathisani Khumalo, Deputy Head of Research at Lafferty. "Promoting cards and technological advancements to this section of the market is an attractive proposition for banks."
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