How to approach online payment localization + local payment methods in South Africa

For global businesses expanding into new markets, it can be tempting to leverage existing international payment methods to get up and running quickly. But for the business, these methods often incur high costs. And for consumers coming across the brand for the first time, such shortcuts can be obvious - limiting trust and loyalty while posing barriers to conversion or leading to cart abandonment. Just as consumer mindsets and experiences vary significantly from one market to the next, so too do payments behaviours and associated expectations. South Africa is no exception.

When it comes to the payments experience - a critical juncture for any digital conversion - providing a seamless and exceptional journey with options consumers have come to expect and understand, while assuaging any security concerns, can be critical to success.  

What are local payment methods and consumer expectations in South Africa?

South Africa has a robust and well-developed digital payments ecosystem, meaning they have high expectations when it comes to the availability of payment methods, a smooth experience and strong security. In particular, localization means paying attention to:

• Choice. South Africans expect to see the online payment method of their choice at checkout. E-commerce consumers may abandon cart if they don’t see their preferred method. In this market, that means methods like card and bank transfer or Instant EFT. But many might also expect to see local apps and gateways such as SnapScan and Zapper
• Speed + security. For online or e-commerce purchases, card remains the most popular method. But speed and security are significant considerations. With rising adoption of Instant EFT, consumers are voting with their behaviour for faster, more secure transactions. According to the WorldPay Global Payments Report, in 2022 Instant EFT was the second most popular method for e-commerce transactions at 22%, coming just behind card at 24%
• Convenience. Our recent report on consumer digital payments preferences found that 57% of consumers indicated “It’s easy and fast to pay” would convince them to choose one online platform or app over another, highlighting the importance of a convenient and seamless payments experience
• Language. Beyond the language itself, it’s important that payment methods and expectations are communicated using the precise terminology consumers are familiar with. Payments via bank transfer, for example, often have different names and requirements, and come with different expectations from one market to the next. Arming consumers with all the information they need, in language they understand, goes a long way toward building trust
• Brand and method recognition: South African consumers trust brands and methods they’re familiar with. Using local methods, with white-labeled branding, can go a long way toward maintaining trust and enabling a more seamless journey

If launched properly, the payments experience in itself can quickly become an advantage for businesses in highly competitive markets.

Case study: why localization matters

Stitch client BusBud is a global business that entered the South African market offering a digital ticketing solution for bus travellers. However, at launch they offered only one method for accepting payments: credit and debit cards. They also charged users in USD, which made it clear that this was a foreign brand. This approach severely limited their reach and impacted trust among this user base, who were sceptical of foreign companies charging in international currencies.

Their research showed that between 20-40% of users in South Africa prefer to pay directly from their bank accounts. This was a big motivation for them to offer Instant EFT payments. When BusBud launched with Stitch they were able to significantly and instantly expand their addressable market, and start to build a loyal consumer base.

What’s particular about the South African market?

• High banked population…: it’s estimated that around 85%+ of South Africans are banked
• … but many customers withdraw cash for daily use: According to a survey by BCG and Discovery Bank, via Bloomberg, almost all customers said they still withdraw cash at least once a month to meet various needs
• High preference for cash payments: BankservAfrica states that nine out of ten transactions in South Africa are still made in cash today. A 2020 IFC study further found that 95% of informal small business customers and 63% of formal business customers in South Africa choose to pay in cash
• DebiCheck for recurring payments: One particular nuance about the South African market is that it’s often a challenge for businesses to accept subscription or recurring payments from consumers that prefer not to use card. Debit Order mandates have been a popular workaround for this challenge. However, fraud and abuse can be an issue. PASA introduced authorised Debit Orders, or DebiCheck, to help mitigate these issues. Stitch offers DebiCheck payments, and LinkPay can also be used to accept recurring payments directly from a linked and verified bank account via Instant EFT
• Need for speed: Innovations around instant payments, including a growing preference for Instant EFT as a preferred payment method, show that South Africans are demanding fast, secure transactions
• BankservAfrica: South Africa has a national automated clearing house, which aims to facilitate digital payments innovation and inclusion, and collaborated with SARB to launch the PayShap instant payments system for low-value transfers   

How Stitch can help businesses localize payments operations

• Seamless collections through a combination of Debit Order or DebiCheck, tokenised card payments and Instant EFT payments via tokenised bank accounts. Our smart routing system can enable customers to pay with the method best suited for their needs
• Access to multiple pay-in methods with one integration, localized for South African consumers, including Instant EFT, Direct Deposit, Debit Order or DebiCheck and Card  
• Cash payments attributed automatically to digital accounts. This enables businesses to significantly expand reach to the 50%+ of consumers that prefer to pay in cash 
• Money management and reconciliation via one integration, with PayOS, including all payments across methods, providers and markets 
• Easy domestic payouts from a Stitch account, removing the need to move funds back and forth between markets to pay employees, suppliers and customers
• Superior customer support, from side-by-side technical integration to local insights from our Customer Success Team that can help businesses continually optimise their payments experience and operations
• Adaptability and customisation, meaning businesses can white label and customise their payments environment with Stitch, offering a consistent customer experience, and enabling businesses to maintain the relationship with their customers. 

Are you an international business looking to launch in South Africa?

Check out our Guide to Launching a Business in South Africa

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