For me an average day starts either with a trip to the gym and a much-deserved smoothie from the nearby cafe, or by grabbing a quick coffee at one of the six coffee shops within 1km of the office on my way to my first meeting. Today, I can pay at any of these locations right from my bank account using Stitch, thanks to our partners Zapper and SnapScan - two of the larger scan-to-pay players in Africa.

On a weekly basis, I use Stitch to pay for all sorts of things -- from booking a spin class at Spinhaus (only when Thea is in town) using Yoco’s online gateway, to any number of e-commerce transactions (most of which I don’t need) at online merchants, thanks to our partners Peach Payments, Pay@ and dLocal. We even use Stitch to purchase office supplies and lunch.

Almost everything I buy online today I pay for with Stitch - from paying my monthly DStv bill, to investing too much in crypto through Binance or Yellow Card. I can pay at restaurants, pay for parking and send my friends money via Chipper Cash (or our own solution, WigWag) - all from my already-linked bank account. 

It’s been a little less than two years since we emerged from stealth, and the ubiquity with which I can use Stitch as a payment method today has far surpassed what I could have imagined.

A nuanced consumer perspective 

What’s increasingly exciting about what’s happened over the last few years is that as a consumer I know that I now have a lot more choice in how I wish to pay and move my money.

Historically, cash or card have been seen as the go-to payment methods in South Africa. On the surface, that might make sense because, statistically speaking, South Africa is a highly banked (85%) market. For many consumers, however, bank accounts simply serve as a post box into which they receive their salary. This is where cash still has a stronghold. The funds land in a consumer’s account, but then in order to get utility from the value in that account, they withdraw it in cash to spend it.

We created Instant EFT solutions to give consumers more ways to get utility from the funds in their bank accounts and participate in the digital economy more fully. With Stitch, anyone with a bank account in South Africa can pay digitally for the same products and services I use Stitch for on a daily, weekly and monthly basis.

Increasing access to new and complex financial products

Beyond opening up a new digital method, today Stitch serves as the only digital payment method for many platforms where card or other methods aren’t viable due to fees, fraud, card scheme limitations or complexities – such as with trading or investment platforms. For a number of our clients, Stitch is the only digital channel enabling customers to deposit funds into savings, investment and crypto wallets.

In addition to increasing access, we’re also enabling new use cases and features that weren’t previously possible.

Today when a customer of a LinkPay client links their account, they also authorise access to their financial data, including account ownership details. This can be referenced against the client’s KYC information to verify that the individual making the payment is in fact the owner of that account. The ability to verify an account during the process of initiating a payment is something that wasn’t possible before, and it contributes to a significant reduction in fraud.

In 2022, we gave consumers a new, more convenient and more secure payment method through which they can access digital commerce and digital financial services. In 2023 we’ll continue to expand on this and go even further to meet consumers where they already are, with more, similarly seamless, experiences that also make life easier for the businesses they love.

Helping merchants more easily manage finances

Perhaps the most exciting part of our growth story this year is that we’ve gone live with a host of leading local and global clients across sectors including e-commerce, PSP, travel, gaming, fintech, crypto and more.

In May, we launched our flagship product, LinkPay. With LinkPay, for the first time in Africa, merchants can get the same benefits as card payments (a one-click, recurring, headless user experience) from a bank-to-bank solution – with all the upside of bank payments: lower cost, lower fraud and better reconciliation, with instant notifications and faster settlement.

LinkPay continues to be an incredibly effective solution for payment acceptance across our clients. However, we quickly realised that “pay-ins” is only one part of the money movement lifecycle for a business that needs solving.

Where there are pay-ins, there are also payouts.

In August, we launched our Payouts solution. This was a natural follow-on from InstantPay and LinkPay. As we were already receiving money on behalf of merchants, it only made sense that we should enable them to send money in the other direction.

Primarily, we see merchants struggling with three things when it comes to payouts which we looked to solve:

• Refunds
• Withdrawals
• Disbursements

While we’re excited by the traction we’re seeing with Instant EFT, we know consumers need more options. In November, we launched Direct Deposit as our first additional payment method, accessible through the same integration.

The final and least obvious piece we set out to tackle is what happens on the backend whenever funds flow into or out of a business. If moving money is hard, it turns out “managing money” – including reconciliation and tracking funds – is just as tricky.

When creating LinkPay, we built tools that could help businesses more easily reconcile Stitch-initiated payments, like webhooks on success for payments initiated, payments received, balances on accounts, programmatic tooling and more.

This functionality is critical in enabling businesses to efficiently manage their finances. But most payment providers only offer this sort of support in part, or not at all. This problem further compounds when you think about businesses that use multiple different payment methods and providers, each of which might have different formats for reporting, different settlement times, etc.

So, while it’s increasingly important from a consumer perspective to “be where the customers are” and provide the options they want and need to execute a payment, adding even just one new payment method can exponentially increase the complexity around finances, reconciliation and maintenance for a business.

We’re constantly looking for ways that we can make the lives of our merchants easier and better, and this is one of the more exciting areas we’ve started to dive into with a few of our partners. Look out for more of this in the coming months.

Looking toward 2023

Since we set out on this journey just a few years ago, it’s been our mission to make it easier for businesses to launch and scale financial solutions, and to operate more efficiently. We created Stitch to remove the costs and complexities around the need to connect to the financial system, making it easier for businesses to move money, and ultimately enabling them to focus more on building great products.

In the coming year, we see a few trends taking shape that will inform how we think about our roadmap:

• The continued move toward more digital or digitised payments. 95% of South Africans have used at least one emerging digital payment method in 2022. Today there are more ways to pay that are gaining traction among merchants and better meeting the needs of consumers.
• However, cash will still be important. Even as consumers become more comfortable with digital methods, more than 50% of transactions in South Africa are still made in cash for reasons from trust, to convenience, to a lack of alternative options. We’ll be looking at ways of bridging this gap and still enabling these consumers to participate in the digital economy.
• Greater demand for instant payments and faster settlement times. In a recent survey, we’ll be publishing soon, we found that 36% of consumers in South Africa prefer Instant EFT as a payment method. Many cited fast settlement, ease of use and convenience as key reasons for choosing the method. Mastercard’s New Payments Index 2022 found that 97% of South Africans are likely to use a digital payment method in the next 12 months, with account-to-account payments (86%) in the lead.
• Omnichannel will continue to grow in importance. While more brick-and-mortar businesses are leveraging e-commerce, the physical experience remains relevant. Coupled with a steady increase in social commerce, competition is rising over the best holistic omnichannel user experience. These merchants need to find more seamless ways to enable their customers to pay no matter where they choose to shop, and easily reconcile payments across channels.
• More global businesses will look to launch or grow in South Africa and other African markets. We’ve helped some of our clients launch in South Africa as their exclusive payments partner, and we’re seeing continued interest from global players to capitalise on the opportunity in these markets. Major multinationals like Amazon and Panasonic have plans underway to enter South Africa. fDi Intelligence ranked South Africa as the number one nation on the continent for economic potential.
• More, and more varied, use cases for crypto. Businesses are beginning to warm to the idea of crypto assets as a form of payment given consumer demand, while more customers than ever are beginning to dip their toes into the crypto market. With more ways to move money into and out of crypto wallets, we see significant potential for even more growth in this sector.
• Clarity on cryptocurrency regulation in South Africa. The Financial Sector Conduct Authority (FSCA) recently classified cryptocurrency assets as financial products. From June 2023, all crypto platforms operating in South Africa will need to obtain a license to provide its services, in turn driving higher standards in the industry for consumer protection.

Next year, we’ll continue to look for more ways to solve some of the biggest and most complex financial challenges for our clients and partners, and for their customers. I’m looking forward to deepening our relationship with them, and bringing many more onboard – alongside our incredibly strong and talented team.