Understanding card payments in South Africa

In South Africa, card payments remain the most popular digital payment method across various industries, including e-commerce and travel. Stitch Product Manager Josh Gordon explains how card payments work, highlighting key players and potential friction points.

The four-party model

Card payments in South Africa operate on a four-party model: 

1. Merchant: The business receiving the payment
2. Payer: The individual making the payment
3. Issuing bank: The bank that issued the payer's card
4. Acquiring bank: The bank that processes the payment for the merchant

Essentially, these four parties communicate with one another through messages sent via networks like Mastercard and Visa. 

Josh explains how a typical online card payment would work, “When a customer initiates an online payment and enters their card details via a merchant’s app or website, a payment gateway like Stitch collects those card details on behalf of a merchant and facilitates the movement of the card information from the payer to acquiring bank then onto the issuing bank, and eventually back to the merchant to confirm that the payment has completed.”

Friction points and the case for one-click payments

“One common friction point for South African consumers is the need to repeatedly enter card details for online transactions. One of the ways Stitch abstracts this is by tokenising card details, securely storing them on behalf of merchants.” 

This means When a user returns to the merchant's website, their saved card details are displayed, enabling one-click payments. This streamlines the checkout process and significantly enhances the user experience.