In a country where 10.5 million people receive their SASSA grants via a cashless system and 70% of the population have accounts at financial institutions, is cash here to stay, asks CHAD FICHARDT, independent tech and finance communications specialist.
The way the world transacts is in transition. Physical cash and cards are morphing into a hybrid of mobile, digital and perhaps even crypto. This brings to the fore exciting commercial opportunity and challenge. Mostly, it offers the chance of financial inclusion.
At the recent Cashless Payments Summit, experts attempted to decipher where this transition is headed and what it means for South Africans.
The idea of going cashless, or replacing cash with digital money – largely enabled through seamless payment on our mobile devices – is being propelled into reality by governments and corporations who see the benefits.
In developed markets mobile payments are leapfrogging card and are well on their way to replacing cash. Singapore, the Netherlands, Sweden and France see almost 60% cashless transactions, according to figures from Mastercard.
The Central Bank of Nigeria is starting to drive ‘cashless’ because it sees the economic benefit. “Going cashless inevitably means you know more about your customers and trade starts to increase. Additionally, where relevant, the more you know about your customer the more you are willing to lend money, which, when done responsibly, leads to further capital available for them to invest and for the economy to grow,” says Anton Gaylard from Crossfin, a local technology investment company.
Cashless transactions are traceable and the amount of information available relating to a particular transaction gives rise to more opportunies for data management and personalisation. In the US, retailers are seeing a 10% uptake in sales from knowing your customer better.
According to Karen Nadasen, PayU South Africa CEO, getting cashless right will enable other trends, particularly in and around eCommerce. “eCommerce is often a barometer for how payment technology is progressing. It gives you an idea of where trust levels are at. As we see eCommerce steadily grow and give rise to better data collection and usage, we see richer opportunities to solve real problems like financial exclusion,” says Nadasen.
However, cash still prevails at the low end of the market. Commenting on the ‘stickiness’ of physical cash, the Centre for Financial Regulation and Inclusion’s Barry Cooper, observes that encashment, or the ability to access cash from other forms of money, will drive digital money uptake.
“You actually need more cash to take the step into digital. The current digital ecosystem is concentrated around economically active areas only and cash reticulation (the development of an accessible network) remains limited. Whereas cash is perceived to be free and universal. This leads to a disproportionate gravity towards the cash economy,” says Cooper.
It is evident that access to platforms, improved convenience and trust hold the key. From a technology provider perspective it’s all about driving the costs down. Interestingly, Cooper points out that the informal digital environment is sophisticated, more trusted than banks in informal markets and highly effective. Increasing trust in digital channels relies heavily on the reliability of the technology and the points of interaction with the real economy. This is something the informal market is getting right, according to Cooper.
At the other end of the spectrum, cashless technology is speeding things up at the point of sale for retailers. Speed through the checkout affects the bottom line directly, not to mention the added benefit of less queuing time and happier customers.
NFC technology, which allows you to tap your card for payment, has halved the time it takes to complete a traditional card payment in retail and reduced by a third the time it takes to do a traditional cash payment.
With mobile payments increasing at 23% year on year in South Africa, all eyes will be on eCommerce. “There is so much progress being made in the fintech and, to a lesser degree, eCommerce space at the moment that all point to a further penetration into cashless,” adds Nadasen. “Payment technology is going to have to move further in the background, or frictionless for mass uptake of cashless to be realised.”
It is peculiar that in a country where 10.5 million people receive their SASSA grants via a cashless system and roughly 70% of the population have accounts at financial institutions, that cash appears to be here to stay, for now.
Money talks and electronic gaming evolves
Computer gaming has evolved dramatically in the last two years, as it follows the money, writes ARTHUR GOLDSTUCK in the second of a two-part series.
The clue that gaming has become big business in South Africa was delivered by a non-gaming brand. When Comic Con, an American popular culture convention that has become a mecca for comics enthusiasts, was hosted in South Arica for the first time last month, it used gaming as the major drawcard. More than 45 000 people attended.
The event and its attendance was expected to be a major dampener for the annual rAge gaming expo, which took place just weeks later. Instead, rAge saw only a marginal fall in visitor numbers. No less than 34 000 people descended on the Ticketpro Dome for the chaos of cosplay, LAN gaming, virtual reality, board gaming and new video games.
It proved not only that there was room for more than one major gaming event, but also that a massive market exists for the sector in South Africa. And with a large market, one also found numerous gaming niches that either emerged afresh or will keep going over the years. One of these, LAN (for Local Area Network) gaming, which sees hordes of players camping out at the venue for three days to play each other on elaborate computer rigs, was back as strong as ever at rAge.
MWeb provided an 8Gbps line to the expo, to connect all these gamers, and recorded 120TB in downloads and 15Tb in uploads – a total that would have used up the entire country’s bandwidth a few years ago.
“LANs are supposed to be a thing of the past, yet we buck the trend each year,” says Michael James, senior project manager and owner of rAge. “It is more of a spectacle than a simple LAN, so I can understand.”
New phenomena, often associated with the flavour of the moment, also emerge every year.
“Fortnite is a good example this year of how we evolve,” says James. “It’s a crazy huge phenomenon and nobody was servicing the demand from a tournament point of view. So rAge and Xbox created a casual LAN tournament that anyone could enter and win a prize. I think the top 10 people got something each round.”
Read on to see how esports is starting to make an impact in gaming.
Blockchain is generally associated with Bitcoin and other cryptocurrencies, but these are just the tip of the iceberg, says ESET Southern Africa.
This technology was originally conceived in 1991, when Stuart Haber and W. Scott Stornetta described their first work on a chain of cryptographically secured blocks, but only gained notoriety in 2008, when it became popular with the arrival of Bitcoin. It is currently gaining demand in other commercial applications and its annual growth is expected to reach 51% by 2022 in numerous markets, such as those of financial institutions and the Internet of Things (IoT), according to MarketWatch.
What is blockchain?
A blockchain is a unique, consensual record that is distributed over multiple network nodes. In the case of cryptocurrencies, think of it as the accounting ledger where each transaction is recorded.
A blockchain transaction is complex and can be difficult to understand if you delve into the inner details of how it works, but the basic idea is simple to follow.
Each block stores:
– A number of valid records or transactions.
– Information referring to that block.
– A link to the previous block and next block through the hash of each block—a unique code that can be thought of as the block’s fingerprint.
Accordingly, each block has a specific and immovable place within the chain, since each block contains information from the hash of the previous block. The entire chain is stored in each network node that makes up the blockchain, so an exact copy of the chain is stored in all network participants.
As new records are created, they are first verified and validated by the network nodes and then added to a new block that is linked to the chain.
How is blockchain so secure?
Being a distributed technology in which each network node stores an exact copy of the chain, the availability of the information is guaranteed at all times. So if an attacker wanted to cause a denial-of-service attack, they would have to annul all network nodes since it only takes one node to be operative for the information to be available.
Besides that, since each record is consensual, and all nodes contain the same information, it is almost impossible to alter it, ensuring its integrity. If an attacker wanted to modify the information in a blockchain, they would have to modify the entire chain in at least 51% of the nodes.
In blockchain, data is distributed across all network nodes. With no central node, all participate equally, storing, and validating all information. It is a very powerful tool for transmitting and storing information in a reliable way; a decentralised model in which the information belongs to us, since we do not need a company to provide the service.
What else can blockchain be used for?
Essentially, blockchain can be used to store any type of information that must be kept intact and remain available in a secure, decentralised and cheaper way than through intermediaries. Moreover, since the information stored is encrypted, its confidentiality can be guaranteed, as only those who have the encryption key can access it.
Use of blockchain in healthcare
Health records could be consolidated and stored in blockchain, for instance. This would mean that the medical history of each patient would be safe and, at the same time, available to each doctor authorised, regardless of the health centre where the patient was treated. Even the pharmaceutical industry could use this technology to verify medicines and prevent counterfeiting.
Use of blockchain for documents
Blockchain would also be very useful for managing digital assets and documentation. Up to now, the problem with digital is that everything is easy to copy, but Blockchain allows you to record purchases, deeds, documents, or any other type of online asset without them being falsified.
Other blockchain uses
This technology could also revolutionise the Internet of Things (IoT) market where the challenge lies in the millions of devices connected to the internet that must be managed by the supplier companies. In a few years’ time, the centralised model won’t be able to support so many devices, not to mention the fact that many of these are not secure enough. With blockchain, devices can communicate through the network directly, safely, and reliably with no need for intermediaries.
Blockchain allows you to verify, validate, track, and store all types of information, from digital certificates, democratic voting systems, logistics and messaging services, to intelligent contracts and, of course, money and financial transactions.
Without doubt, blockchain has turned the immutable and decentralized layer the internet has always dreamed about into a reality. This technology takes reliance out of the equation and replaces it with mathematical fact.