In the race to get the unbanked using digital financial services, it’s not just about using a card instead of cash.
“Our biggest competitor is not the other payment schemes – it’s cash,” says Bevan Smith, head of risk at Visa. “It’s about how we solve for those use cases where cash is currently being utilised. It’s not great to be coming up with smart technology or other fancy tech when, you are not solving for the needs of the unbanked – who are a large portion of the population.
It’s not just about the banks that partner with Visa, but also about changing behaviour on a larger scale. We had to ask ourselves – “What are the use cases for cash and how do shift the consumer behaviour towards more secure payment technologies?”
Smith says: “From a government perspective, one of our big clients is the social grants distributor, SASSA. They have about 8 million cards in circulation and we’ve partnered with SASSA to digitise that payment flow. Now, there are 8-million people who get their social security money paid into a bank account.”
It also extends beyond just having money in an account. It’s about who can accept these payments once they’ve gone digital.
“Having payments accepted on the merchant side is vital to ensure cash isn’t needed,” says Smith. “We’ve done work with YOCO – and they are not only making accepting payments accessible but also democratising how small merchants access the ecosystem. This helps merchants on the street corners, who used to only accept cash, now be able to take a card payment.
“We’ve always been a business-to-business player. Traditionally, it has been banks, and now increasingly we see fintechs joining the payments ecosystem. The power fintechs have is that they’re spotting gaps quickly and they’re there to try and solve certain use cases. By partnering with them, providing access to our network, to our risk services and access to other value-added offerings from our product perspective, we can now facilitate and enable payments by leveraging the best Visa has to offer. Essentially fintechs are able to leverage VisaNet, our products and services to bring the very best payments solutions to their clients.”
Smaller businesses are increasingly leveraging their online presence as a sales channel which means that payment security needs to become more secure and easy to set up.
Smith says: “The big question is: how do I make this convenient, and how do I ensure a high level of security, regardless of the platform I’m using? As you can imagine, there are many payment providers and with that comes a number of different payment plugins that sit on websites or in apps. That’s where the biggest challenge is: How do you control that from a risk perspective?
“We see some vulnerability where the available payment plugins that are being utilised in websites and the key reason, often, is that they’re just not applying the most recent software updates/ patches. The task becomes even more challenging we you consider that most online businesses.customise the payment plugin to the needs of their specific process flow. So as an industry we needed to address the question: ‘How can I develop a single standard for the buy button on the website?’
“All of the payment schemes have come together to develop the Secure Remote Commerce specifications which outlines the standard for the buy button on a website and that’s the real advantage here. So we have Visa Checkout, which addresses the question, but quite honestly this is about protecting the payment ecosystem. Balancing security with functionality is becoming the ideal for payment schemes, whether it be online or in-store.
“The key thing here is the point of checkout where the consumer interacts with the actual payment infrastructure. From a payment industry point of view, Visa, and all the other payment schemes, are coming up with a standard where we are all thinking about what the customer experience will look like in local markets like South Africa.
“We change these interactions as the technologies evolve. Look at contactless payments, for example. We have about 40% of transactions that are contactless. The only way this works is if there’s acceptance. If you walk into a Shoprite or a Woolworths, cardholders need to know these stores actually accept that technology. It doesn’t only apply to stores. We’ve done some work where we recently launched a faster solution to transportation. If you go onto the Gautrain, you can use contactless payment there, because we want to work with everyone and drive adoption in the market.”
Changing payment behaviour from cash remains a challenge that places a responsibility on payment processors to change the way they solve local use cases for the countries where they operate.