SA e-commerce 'expansion possible'
Cape Town - The new online debit card system has the potential to expand e-commerce to a range of new customers and merchants, the developer has said.
"We're kind of ready now for e-commerce growth because the internet access is there. What we're hoping is that because people can now start to use the debit card, it will now accelerate the usage of the e-commerce world," head of new business at MTN MobileMoney Dave Parratt told News24.
The expansion would open new kinds of opportunities for customers and merchants, he said.
"The exciting thing about the e-commerce world is not the existing merchants as we know it: I think it's that the debit card customer can now look to enjoy new types of merchant categories."
The internationally patented payD system aims to bring people who have bank accounts, but no credit cards, into e-commerce by making online payments similar to buying with a debit card at a store.
"For example, if I want to make a payment for my rates and taxes, I need to logon to internet banking. But if you got a message saying: 'Your rates and taxes are due would you like to pay for them?' And you said 'Yes', and the message came back saying: 'This is how much you owe, enter your PIN', it changes the game.
"There are about 700 million bills in South Africa alone could be paid using this system," Parratt said.
A small percentage of South Africans have credit cards and buying online has resulted in a range of solutions.
Social network MXit has launched Moola to allow users to purchase virtual products online and is moving towards an e-wallet.
PayPal launched in SA recently and BlackBerry maker Research In Motion has allowed purchases with BlackBerry Messenger (BBM) linked to airtime.
Parratt said that each system had its shortcomings and didn't cater to everyone who had a bank account.
"The real problem you've got with all of those alternative environments is they're either e-currencies at different levels or they are wallets that are only able to operate in the e-commerce world.
"Yet every one of the customers that they target has got a bank account and a debit card.
"So if you think about what you needed to do with these different wallet systems: I had to go to my bank account. The only way I could get to it was logon to internet banking, make a payment to top up that wallet and use that wallet to shop," he said.
Differentiating itself from an online wallet system, the payD system allows users to shop as if they were in a retail store, Parratt said.
"Hopefully I put enough money into that wallet or if I had excess money in that wallet I couldn't get that money out. Whereas what this does, it turns around and it's no different to shopping in a retail store. It transcends all of those components.
In the developed world, credit cards are commonly used to transact online and Apple users this payment methodology for purchases from its iTunes stores worldwide.
However, this method may exclude those developing countries like SA, India and Brazil where credit card access is not universal.
"The US is quite different to the rest of the world. They just don't realise that the vast majority of the population of the world that might be banked, don't have credit cards, therefore they're excluded from e-commerce," said Parratt.
He said that the crisis in e-commerce in SA came about in 2000 as the market was expanding, but payment systems were unavailable.
"The real crisis came about because not enough people qualified for credit cards - it's only about 3% to 5% of the population."
The system only caters to a few merchants at the moment, but the strategy is to get more merchants and banks on the system quickly.
"Our strategy of getting new merchants was rather than going one by one, we went to the payment aggregators. We probably have, lined up in the background, about 3 000 merchants that will be coming on.
"It could take up to a year to bring them on, but we will see an acceleration of the rate that they come on," Parratt said.
- Follow Duncan on Twitter