Is this the end of credit card payments?

Thomas Pays, entrepreneurs and founder of of i-Pay Payments Solutions. (Picture supplied).
Thomas Pays, entrepreneurs and founder of of i-Pay Payments Solutions. (Picture supplied).

Considering the evolution of payments from cash, to cheque books, to credit cards and now e-wallet options, it is possible that in the near future, more and more people will make payments directly from their online bank accounts. This is according to Thomas Pays, founder of innovation tech business i-Pay Payments Solutions.

This cashless payment service enables South Africans to make EFT payments when shopping online. i-Pay aims to offer one-step payments from anywhere, using a mobile device such as a smartphone, laptop or tablet, says Pays.

There are plans to introduce EFT payments using i-Pay at physical points of sale within the next six months. This will work similarly to Apple Pay in the US, which uses scanning to make payments.

Pays believes in the next ten years, there won’t be as many cash and credit card payments as there are now. “The mindset of the consumer is changing towards convenience.”

The innovation came about “by accident”, while Pays’ digital agency, Just Perfect Digital, was developing an e-commerce platform for users in the African market to create an online store with access to payments.

After realising credit card payments presented a fraud risk, Pays says that EFT payments presented a better opportunity for the platform.

Pays’ team decided to put the e-commerce platform idea on hold when they saw the potential of developing the payment solution. “With i-Pay, there is so much potential for growth that it is almost infinite what you can do in the next five to 10 years with it,” says Pays.

i-Pay is different to credit card payments in that it is cost effective. Purchase fees are a third lower than credit card charges, says Pays. Purchases are also quicker and user-friendly.

i-Pay automates the EFT transaction process; when making a purchase online, the client can select the i-Pay payment option.

Thereafter, they will have access to their online banking profile account, once entering their username and password. They can choose to pay from their credit, cheque, savings or business accounts.

Human error is avoided as i-Pay automatically enters the account number, the merchant’s details and the amount to be paid. The payment is concluded by entering the one-time password or using the push service. This makes the process quicker for the client as it can take up to 15 seconds, says Pays. The merchant will be notified if the payment was successful or declined.

There are no additional charges for using i-Pay. Clients do not need to register to use the service if they bank with one of the five major banks – Absa, Capitec, FNB, Nedbank and Standard Bank – which are all integrated with i-Pay. Only merchants are required to register. “One of the reasons we have such a high growth is because it is convenient; there is no barrier to entry,” explains Pays.

The platform went live in November 2014, and i-Pay now has over 100 registered merchants. Pays emphasises that their interest is not to accumulate merchants, but rather to connect with merchants who have a large network of clients or users. The company has linked up services with blue chip companies like Sage and Massmart, and is currently engaging with Telkom.

EFT payments have been growing in popularity among some of i-Pay’s clients. Some clients experienced that, where on average 90% of payments were via credit card and 10% via EFT, EFT payments slowly began to cannibalise credit card payments.

Within the space of six months, EFT payments have grown to represent up to 30% of payments. “We have only just reached the tip of the iceberg,” he says.

For merchants, i-Pay offers the benefit of being cheaper and safer; payments are made directly into the merchant’s bank account without going through a third party.

Pays says i-Pay has the same revolutionary impact credit card payments had when first launched in the late 1980s. The only difference with i-Pay is that the client’s personal details are not shared with the merchant and it is cheaper. “We believe we will take the market of the credit card away over the next five to 10 years,” he says.

They feel strongly about this especially as i-Pay plans to launch in Europe in the next two to three years. i-Pay will have the opportunity to integrate with all the banks when it becomes law to create a safer place for clients to receive and make payments, says Pays.

The payment solution is currently only operating in South Africa but Pays hopes to enter the market in Nigeria and Kenya by the end of the year. Pays wants i-Pay to be the central platform for banks around the world to be integrated.

Over the past 10 years, Pays has had experience with a number of start-ups such as e-commerce business, which grew and was acquired by a bigger business.

He says that an innovation is successful if it meets a need and is marketed well. He is inspired by leaders of business tech like Elon Musk and entrepreneur Justin Drennan, who he says is the African equivalent of Mark Zuckerberg.

“If you know the tech industry and digital industry in Africa well, you will know there are a lot of influential and knowledgeable entrepreneurs hidden in the background.  I would like to be like that,” he says.

This article originally appeared in the 7 April 2016 edition of finweek. Buy and download the magazine here

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