Tap-to-phone transactions could shake up SA payments space

No point-of-sale hardware required

The news earlier this week that Apple plans to allow merchants to accept contactless payments directly on iPhones, via a partner-enabled app, has stirred a great a deal of interest.

Although tap-to-phone payment facilities have been available on some Android phones for a while already, the fact that Apple is introducing “tap to pay” on the iPhone (albeit only in the US for now, and only later this year) has raised debate about how it could impact the payments market.

Will small traders still need to buy a point-of-sale (POS) device from a bank – or from one of the many fintech players, such as South Africa’s Yoco and iKhokha, that offer low-cost mobile POS hardware terminals?

In response to questions, Yoco said it’s not looking to offer tap-to-phone payments yet but emphasised that its devices can be used for contactless transactions. Chief technology officer Lungisa Matshoba said Yoco is not concerned about the emergence of contactless phone transactions. The company is determined to focus on providing solutions and devices that are aimed at all payment scenarios, he said.

Visa, the multinational financial services provider that, along with rivals like Mastercard, is actively involved in developing solutions in the tap-to-phone payments space.

The head of Visa in South Africa, Aldo Laubscher, said in an interview with TechCentral that the company has big plans in the tap-to-pay-on-phone market.

The company has already developed a system for Android devices but wants to expand this to iOS and even to Windows-based devices.

The technology eliminates the need for portable POS devices that are used mainly by traders and other small enterprises. The tap-to-phone-to-pay feature will be cost-efficient, will make e-delivery services easier and eliminate the need for bank authorisation.

Adoption

Mastercard is also actively involved in the space, and already offers tap-to-phone-to-pay through Nedbank and Hellopay (a South African payments facilitator and the financial services arm of Hello Group).

Banking group Absa also offers an app, called Absa Mobile Pay, that allows customers to use their Android phones as a software-based POS. All payments require a customer Pin for added security.

Not all local banks have signed up to use the technology — yet. First National Bank said in a statement to TechCentral that it is “at the forefront of digital payments and looks forward to providing new digital payment solutions to our customers, as and when they become available”, without elaborating further.  – © 2022 NewsCentral Media

Source: techcentral.co.za