14 April 2022

What are the benefits of instant bank transfers in South Africa?

More than 40% of consumers in South Africa indicated a simpler checkout experience would play a role in encouraging them to complete an e-commerce purchase. ...

Thea Sokolowski, Head of Marketing & Communications​

|4 Minutes, 12 Seconds read

More than 40% of consumers in South Africa indicated a simpler checkout experience would play a role in encouraging them to complete an e-commerce purchase. With more choices than ever, consumers today value convenience, speed and security – especially when it comes to the way they choose to pay.

New payment methods, such as Instant EFTs, were created to tackle some of the most significant challenges both customers and businesses face when it comes to payments, including long settlement times, high fees for businesses, risk of fraud and a cumbersome or inconvenient user experience. Businesses that invest in improving the payments experience will undoubtedly see an increase in conversion – and enjoy cost savings.

Out with the old

Traditional payment methods such as debit orders, card transactions, and cash-based methods incur high fees and chargebacks, and face challenges with fraud. They’re also often less convenient for customers, which can inhibit conversion.

Card transactions, for example, can cost businesses in South Africa between 2.2% and 3.5% in fees. As well, merchants get hit with expensive chargeback fees if a customer recalls a charge or suspected fraud is at play. And while the banking penetration in South Africa is between 70-80%, card penetration is likely to be lower than this, which means that operating only card severely restricts merchants’ addressable markets.

In South Africa, instances of card fraud skyrocketed during and post-pandemic. “Gross losses due to fraud committed on…debit cards amounted to R520.5 million in 2020 – an increase of 26.5% compared to 2019.”

As a result, merchants are increasingly aware of the need to invest in higher levels of security and fraud prevention. According to a recent report, “39% of merchants indicated plans to invest in fraud and security solutions over the coming year. For 33% of merchants, improving security for digital transactions is the priority.”

Investing in better ways to pay

Today, customers have the option of making faster, more convenient payments directly from their bank accounts by paying via bank transfer. Merchants that accept bank to bank payments can save on fees and, in the case of Instant EFTs, receive funds instantly. This payment method is growing in adoption across the continent. Today, instant bank transfer is the fastest-growing payment method globally, and South Africa is no exception.

According to a report by Deloitte on the future of payments in South Africa, the move towards instant payments is an important area of innovation, and core to the payments modernisation journey. “[There is a] sweet spot that can be achieved when innovative technologies like instant payments with overlays combine with mobile technology, bringing in fintech players with customer-serving front-end applications, connecting to traditional banking services through APIs, and accessing the real-time payment system to deliver the payment instantly. This brings speed and efficiency into everyday transactions, building trust and reliance on alternatives to cash and ultimately supporting financial deepening.”

As mobile internet user penetration continues to grow – rising over 60% today – and with it, consumer interest in innovative alternative payment methods, the ability to pay via mobile directly from a bank account will continue to replace the need for a card to act as an intermediary.

Why should businesses offer instant bank transfers (Instant EFTs)?

Solutions like Stitch are bringing such innovation to the payments experience by enabling fast, convenient and secure bank to bank payments via Instant EFT in South Africa, at a fraction of the cost of card.

Payments made via Stitch are authorised by the customer and initiated directly from their verified bank accounts, and there are no chargebacks.

Businesses that offer bank transfers as a payment method enjoy:

  • Higher conversion rates: By enabling fast, secure payments, businesses can remove barriers in the checkout process to reduce cart abandonment
  • Lower fees: Businesses that use Stitch save up to 50% compared with the cost of card transactions and debit orders – and our rates are the most competitive in the market
  • No chargebacks and reduced fraud: Customers log in securely with their banking credentials to initiate bank payments, reducing risk of fraud
  • Verified and balance-checked payments: With Stitch’s payments APIs, you can also check customer bank KYC, transaction history, and active balances to mitigate against failed collections
  • Greater reach: With more ways to pay, businesses can reach even those without access to card

Customers that choose to pay via bank transfer enjoy:

  • A better, faster payments experience: With Stitch, customers simply log into their bank accounts and can initiate a payment in seconds, without leaving the checkout flow
  • Faster settlement times: Instant transfers settle quickly, meaning customers topping up a wallet or remitting funds can access their money sooner
  • Highly secure payments: Stitch payments highly secure, and customers can be sure their data is safe. Stitch leverages highest level security standards and will never share user data without customer authorisation
  • Fewer failed transactions: There’s a far lower risk of failed transactions when payments are made directly from a customer’s bank account

Ready to increase conversions and offer your customers a better, more secure way to pay? Get started with Stitch now by signing up via self-serve here.

Get started

Build and scale your financial solutions, faster

Link and verify users’ financial accounts for easy access to financial data, and seamless and secure payments and payouts, all through a single API.
By clicking submit, you’re agreeing to ourTerms of Service