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How informal traders can drive cashless payments

Despite the majority of adult South Africans owning bank accounts, more than half of the total value of all consumer transactions in the country are still conducted in cash, says MARK ELLIOTT, Division President of Mastercard Southern Africa.

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This suggests that being formally banked may not be enough of an incentive for consumers to move away from cash. Accelerating the pace of migration from cash to digital and card payments must be a priority for catalysing economic growth.

As long as people are trapped in a cash economy, they are locked out of many economic opportunities in the financial mainstream. These consumers represent some of South Africa’s most financially vulnerable people, and yet they are disproportionately exposed to the risks and costs of cash, including high transaction fees, the risk of theft, and the inconvenience of transporting and handling physical money.

Addressing this challenge will take a concerted effort from payments companies, telcos, merchants, banks, governments, regulators, fintech companies and other stakeholders. Over the past few years, we have seen a range of compelling digital payments solutions coming to market – including simple mobile payments – yet many of those initiatives lack the scale to make a real difference.

More cashless payments for the informal sector

We believe the really exciting opportunity lies at the intersection between the informal small and micro-businesses that form the backbone of our economy and the tech-savvy youth. The small business and informal sector accounts for turnover of around R75 billion annually in South Africa alone, which we cannot ignore if the goal is to increase the number of cashless transactions.

Consumers, particularly those who have grown up with mobile phones, are eager to pay using digital channels. In South Africa, 73 percent of banked consumers are ready to pay with their mobile phones, according to the Mastercard Impact of Innovation study. Yet many of the places where people live and work – the spaza store, the hair salon on the corner, the neighbourhood tavern – are not enabled for acceptance of mobile and card payments.

Mastercard research shows that around 90 percent of South Africa’s informal enterprises run as cash-only businesses, even though 51 percent report they have encountered strong customer interest in paying by card. The few that have introduced card and digital payments have reaped the rewards. Merchants that introduced card acceptance reported an average increase in turnover of 50 percent, and those that introduced mobile payment acceptance via Quick Response (QR) codes saw their revenues climb by 10 percent.

Overcoming barriers to adoption

What then are the barriers to adoption of these solutions? Even though many informal enterprises see the ability to accept card payments as a step to increasing revenue, lack of access to formal banking tools and understanding of available payment options limits their opportunity for growth. These businesses also cite the perceived cost of accepting mobile and digital payments as barriers to acceptance, with many unaware of low-cost alternatives to traditional point of sale solutions.

To change this picture, payments companies should help merchants take advantage of high mobile penetration rates by offering them simple solutions to accept mobile-friendly card and digital payments.

Mastercard offers simple solutions designed to help small businesses and entrepreneurs accept digital payments through technologies like Masterpass and in partnership with innovators like iKhokha and Spazapp. Such solutions remove cost and complexity barriers from payments acceptance, including high monthly rentals and transaction costs, and the need for dedicated card payment terminals. All any merchant needs to accept and process payments is a low-cost terminal or an Android or iOS device.

We have also identified the need to educate consumers and merchants about the true cost and danger of cash to join the dots between small merchants and customers who are eager to pay using their mobile devices or cards. However, no single player, sector or government can solve these challenges on its own.

A key element of our strategy is to work closely with fintech innovators and financial services companies to introduce affordable payment and financial inclusion solutions for merchants and consumers that can solve their everyday challenges. We must build bridges between all major mobile and digital payments services in the market to deliver the seamless, on-demand experience consumers expect at every payment point. It is only through collaboration that we can deliver scalable, secure, interoperable and convenient payment systems that will bring us closer to a cashless world.

Bridging the divide between South Africa’s cash-based economy and the digital future will demand a combination of local know-how with global scale, insights and best practices. We have a rare and urgent opportunity to use today’s mobile technology to leapfrog old payment practices, in much the same way as the continent leapfrogged fixed-line infrastructure and went straight to mobile.

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Arts and Entertainment

Netflix to make SA series

The world leader in streaming movies has announced the first South African production to join its Originals roster.

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World leader in entertainment streaming services Netflix this week announced its first Original series in Africa, with South African series Queen Sono.

The news comes immediately in the wake of local rival Showmax announcing it’s first original drama production. In this context, it heralds a new phase in the evolution of streaming video-on-demand in South Africa.

The action-packed series follows Queen Sono, the highly trained top spy in a South African agency whose purpose is to better the lives of African citizens. While taking on her most dangerous mission yet, she must also face changing relationships in her personal life. The series will be created by Director, Kagiso Lediga and Executive producer Tamsin Andersson.

South African actress, Pearl Thusi, will star as Queen Sono, with the character having been created with her in mind. Thusi is also known for her performance in the romantic dramedy, Catching Feelings, available on Netflix.

Pearl Thusi stars as Queen Sono in Netflix’s first original series in Africa.

“We are excited to be working with Kagiso and Pearl, to bring the story of Queen Sono to life, and we expect it to be embraced by our South African users and global audiences alike.” said Erik Barmack, Vice President of International Original Series at Netflix.

“We are delighted to create this original series with Netflix, and are super excited by their undeniable ability to take this homegrown South African story to a global audience. We believe Queen Sono will kick the door open for more awesome stories from this part of the world” added the director and executive producer of the series, Kagiso Lediga.

The series is due to start production in 2019.

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Featured

Microsoft adds Chrome to Edge

Microsoft is working to build a new version of its Edge browser on the open-source version of Google Chrome, writes BRYAN TURNER.

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After 20 years of backing Internet Explorer and its underlying software technologies, Microsoft has chosen to integrate Chromium, the open source version of Google Chrome. This announcement comes just three years after launching Microsoft Edge, the refreshed version of Internet Explorer.

“We intend to adopt the Chromium open source project in the development of Microsoft Edge on the desktop to create better web compatibility for our customers and less fragmentation of the web for all web developers,” said Joe Belfiore, corporate VP at Windows, in a blog post on 6 December.

The change affects the back-end elements of the browser that run in the background to make the web pages work for the user. The shift includes scrapping Microsoft’s EdgeHTML rendering engine in favour of Chrome’s Blink.

Utilising the Blink engine will allow Microsoft to support versions of new Edge on Windows 7, 8 and 10, as well as a version for macOS. Belfiore said that the company had also started contributing to the Chromium open source project: “We’ve begun making contributions to the Chromium project to help move browsing forward on new ARM-based Windows devices.”

Microsoft’s move to Chrome has shifted the “browser wars” in favour of Google Chrome, as Opera and Edge will now both be using Chrome’s rendering engine.

“If you’re a Microsoft Edge customer, there is nothing you need to do, as the Microsoft Edge you use today isn’t changing. If you are a web developer, we invite you to join our community by installing preview builds when they’re available and staying current on our testing and contributions.” said Belfiore.

Edge’s project manager, Kyle Alden, confirmed in a Reddit thread that Chrome extensions will be compatible with the new version of Edge. It is expected to launch in a preview build in early 2019.

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