by SAVIOUS KWINIKA
JOHANNESBURG, (CAJ News) – THE coronavirus pandemic has pushed South Africa closer to a contactless or low-touch economy.
However, some societal and development issues are hindering progress.
This is according to an expert as Africa’s most advanced economy experiences mixed fortunes in this transition.
Philasande Sokhela, Faculty Member, Johannesburg Business School, noted pandemic had edged South Africa closer to a contactless economy where the preference for transacting was increasing.
Such transactions are tap-to-pay, eWallet, GEO payment or electronic transfer.
Sokhela noted consumers were becoming more comfortable interacting with bots via platforms like WhatsApp, whose pervasiveness has helped.
The 2019 Future of Payments in South Africa report by Deloitte and Mastercard stated that “although 80 percent of South Africans have a bank account, most consumer transactions are still cash-based.”
Yet, 45 percent receive cash salaries.
The report added although rural and township residents were found to use cards for 60 percent of their transactions at formal retailers, only 4 percent of transactions were card-based at informal retailers.
Sokhela said the financial sector could no longer shy away from the significant disconnect between the majority of South Africans and the growing array of technologies supposed to facilitate the transition from physical to digital payments.
“At the heart of this disconnect are societal and development issues, as opposed to the capability of the technology,” he said.
“So much is taken for granted by those who design from the point of privilege, adopting a technological and access perspective as opposed to a consumer point of view,” said Sokhela.
Sokhela argued a lot of innovation in the market is either an iteration of technology from the West being tested within a South African context.
It could be born in a boardroom without an understanding of how the technology will be consumed.
“The corporate might have a beautiful digital payment product, but if the people find it difficult to access the product, it is pointless,” the expert said.
The World Bank rates South Africa as the most unequal country in the world, out of the 164 countries in its global poverty database.
“This has caused a significant digital divide between the haves and the have-nots,” Sokhela stated.
Sokhela said while banks provide instant payment for inter-bank transactions, there were generally high fees attached to this, adding further friction to the process.
“As a result, trust levels decrease even further,” Sokhela said.
The financial sector also needs to consider how information is packaged and how technology is designed.
“This technology and language barrier affects the adoption rate of digital payment technologies,” Sokhela said.
On a positive note, there is greater convergence happening in the financial space, including telecommunications and mobile companies now facilitating financial transactions.
– CAJ News