Virtual wallet on the cards

2011-02-12 00:00

A LOCAL technology company called Lidonga Technology says it will launch a mobile payment gateway, a first for South Africa. The system will circumvent the use of foreign-owned Visa and Mastercard payment systems, saving the country billions of rands that would normally go to these foreign switching companies.

Chief technology officer at Lidonga Technology Roan Murray said Visa and Mastercard are making billions from South Africans who use debit and credit cards to shop as the country does not have an alternative payment system. Murray said Lidonga has designed a system called M okotla (a Sotho name that can be translated to mean a carrying case or wallet in this situation) to change this.

One of Lidonga’s major shareholders is Connie Nkosi, the first black South African woman to graduate with an MBA from Wits Business School. According to Murray, the company has invested about R40 million in starting up the payment gateway. Registered users will be able to load money to the virtual wallet from their bank accounts, allowing them to pay for commodities at retailers using their cellphones.

Murray said the retailer’s point-of-sale systems will be integrated with Lidonga’s systems. When a customer makes a payment at the till the payment will be confirmed and a receipt will be printed as proof of payment.

Murray said Lidonga is in advanced talks with a major retailer in South Africa and hopes to launch the payment gateway by the end of July. The gateway would have a flat fee-based charge, which would be cheaper than using Visa and Mastercard.

“When you have this wallet, you will also be able, at the pay point, to pay by using your phone. Something that is interesting is that all payment switches are non-South African or non-African. Every time you pay with that piece of plastic at least four percent of that money goes out the country,” Murray said.

“We all know where the switching partner is. It’s a European or a United States company. Every time we transact with this technology, someone in the U.S. makes money.”

On costs Murray said customers would save and are likely to receive rewards as retailers would also save on switching costs.

Murray said Lidonga has 113 patents on its technology in the U.S., the European Union, Australian and China. He said, currently, the payment gateway provides access to all National Lottery products, pre-paid airtime and electricity.

“We don’t only accept transaction for a Lotto ticket. If you win something from that ticket it is automated and we then do the price payout directly to your wallet,” Murray said.

By the end of July the plan is to have a broad payment system that will allow South Africans to buy groceries and pay with their cellphones.

— Moneyweb.

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