BY: Simnikiwe Mzekandaba, IT in Government Editor.
The shift to contactless and digital wallets continues to be on the rise, and South Africa is leading the charge of contactless payments adoption on the continent.
This is one of the key findings presented today, as part of Visa and Discovery Bank’s SpendTrend23 report, which analysed SA’s spending.
The report compared spending data between Discovery Bank and SA. The data was analysed by client group and stratified by card type using Visa’s payments database.
It covers the period from 2019 to 2022, to identify and understand the shifts in consumer spending behaviour and payment trends before, during and after the COVID-19 pandemic.
Lineshree Moodley, country manager for Visa SA, said over the last two years, there has been increased talk around digital payments, with peer-to-peer apps and digital wallets growing in popularity and adoption.
She explained that adoption started off because of hygiene purposes during the COVID-19 pandemic, but adoption is increasing as the user-experience improves.
Moodley added that digital wallets cause a multiplier effect on consumer spend and engagement, with adoption expected to further increase. “If you’ve activated a digital wallet, the more likely you are to actually spend your money in this contactless environment.”
Looking at the trends broadly, Moodley stated there has been a sustained consumer shift to electronic payments. This has been witnessed at a global level where this has been both stable and strong, when looking at data from 2022 compared to 2019. There is also strong e-commerce growth.
Within the South African context, the country has experienced significant digital transformation, she revealed, saying that over 85% of local consumers have reported either the same or increased spend when it comes to their debit, credit and prepaid cards.
“Based on the study, we see that consumers’ spend on their cards has increased by 22%, in comparison to 2019. The three biggest categories are groceries, travel and services.”
In light of the shift to electronic payments, she advised the financial services ecosystem to invest in alternative forms of payment. For example, retailers or restaurants must be able to enable payments via QR (quick response) codes.
Moodley said digital wallet uptake is expected to continue to increase. “What is quite key is that we need to keep pushing education, especially when considering certain consumer segments. We’ve got to build trust in using digital payments.
“South Africa will continue to lead from a digital transformation perspective; we’ve got to get more innovative in terms of the type of products that we take to market,” she commented.
Hylton Kallner,CEO of Discovery Bank, said there is significant growth opportunity for online shopping in SA.
Consumers who were compelled to use online shopping and contactless payment methods during the pandemic continued to so in 2022, according to Kallner.
The key driver, he revealed, are consumers in the 31 to 40 age demographic, with more than 70% more likely to shop online when compared to consumers in their 50s.
He added that the other key driver for online shopping is the day of the week. “When people are working – Monday, Tuesday and Wednesday – they tend to shop more online. When it gets to Friday and Saturday, there is less online shopping and we see a significant increase in point-of-sale transactions.
“The online/offline shift is no longer around what’s available…but much more around people’s lifestyles and convenience factors.”
He also indicated that people are twice as likely to buy clothing than groceries online.
“We continuously analyse spending behaviour to understand how we can enhance our clients’ lives and improve our products. Identifying trends such as these outlined in the report enables the industry as a whole to provide consumers with seamless, convenient ways to interact in a digital economy.”
From an overall 2023 trends perspective, Kallner commented there will be continued growth in online spend and further adoption of contactless payments.
“We now have more than two-thirds of transactions in SA contactless, which is right up there with the global trends.
“What that does is not only make payments simple and seamless but, in many cases, much more secure. It also takes us more towards a cashless society, which is much lower cost and more secure for everybody in the entire value chain,” he concluded
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