- 13 January, 2023
How we think about money and value has evolved over hundreds of years, many innovations, and dynamics in social structures. The rapid advancement of the internet and technology has made technology part of everyone’s lives, with almost immediate access to stores of value like electronic wallets, bank accounts, and more. We transact at a greater volume than ever before and paying and receiving funds has become easier than ever before.
This publication shares ideas and insights for what the future of payments looks like for South Africa. With the South African Reserve Bank (SARB) pushing industry towards innovating for Rapid Payments Programme (RPP), we ask what can smart phones offer to accelerate the adoption of digital payments? What can we learn from global markets? And what does industry need to succeed in digitising the economy?
What’s in the publication
Money and stores of value
Receiving and spending money has become a norm for everyone. It is a ubiquitous part of living, and something we do multiple times per day sometimes. Little thought is put towards the myriad of stores of value, transaction types, and the inherent trust needed to keep the system working, and economy cycling effectively.
Cash and digital payment mechanisms
Various studies and overall cash flow analysis have found that the prevalence of cash has a number of disadvantages for the country’s people, government, and economy.
The case for financial inclusion
The underbanked have formal bank accounts but do not use the full spectrum of offerings and opportunities that come with having a bank account.
What consumers and merchants need and expect
A customer-centric design places the customer at the centre of the solution. All decisions must deeply consider how to addresses customer needs, frustrations and motivators if a truly successful solution is to be designed.
The payment landscape
The payments landscape is made up of a combination of entities which interact with each of these during the payment transaction process. All of these entities play specific roles in the payment processing cycle.
The evolution of digital payments beyond cash
Cash remains king in many economies such as South Africa’s for many reasons, including that it is easy to understand, trusted, convenient, and free of transaction fees. There are of course many other systemic issues that fuel corruption, bribery and tax avoidance.
Rapid payments infrastructure
Around the world, we are seeing the adoption of new payment ecosystems which can shift the focus away from innovating for the financially included, to addressing the needs of the masses, with the goal of moving away from cash and towards digital.
Learning from instant payment initiatives globally
There are several considerations when drawing correlations to other countries that are leading the way in solving this issue.
Considerations such as emerging markets, social economic status, tech infrastructure, tech literacy, social inequality, cultural variances and partnerships (open banking).
Succeeding with Rapid Payments Programmes
Each country has its nuances and incentives for pursuing a digital cashless economy, however there are some clear parallels to kick-start adoption and maximise the chance of success.
Creating a strategic approach
Solutions come in a variety of shapes, with their own strengths, constraints, and approaches. A solution might entail a mix of digital experiences, technical integrations, business process changes, a change in sales and distribution efforts, marketing tactics, and more.
Piecing the puzzle together
Choosing product-market fit experiments, defining how technology and operations work together, deciding how success is measured and creating an action plan all play their part in creating innovative and competitive solutions.