The eCommerce Opportunity in South Africa
High mobile penetration, rising consumer confidence in online transactions, and secure online gateways are driving eCommerce growth globally. However, by international standards, eCommerce penetration across Africa is still relatively low. But it is estimated that 600M consumers will be online by 2025, spending $75B each year, which offers a tremendous opportunity.
Traditional payment instruments, including payment cards and credit transfers, remain the preferred method of payment for online shoppers in South Africa—however 40 percent of online transactions in the next five years are expected to be alternative payments.
97 percent of South Africans believe that their payment credentials are safe when shopping in person, but nearly one-fifth (19 percent) believe that their credentials are not safe when shopping online. There is a real gap in perception of safety, which means that the growth trajectory of in eCommerce in South Africa may be stymied by the perceived threat of the fraud online as well as actual fraud. 70 percent of consumers indicate that they would stop shopping at a merchant where they have been a victim of fraud. Fraud is a reality (one-third of all consumers report that they have experienced card fraud in the past five years) and the growth of eCommerce without effective fraud prevention measures will deter fraud-fatigued South Africans from moving their shopping online.
Retailers are taking advantage of the eCommerce opportunity by focusing intensely on digital channels to drive growth. However, there are a range of growth strategies that can be pursued, as not every merchant has the same starting point or the same motivations. What these growth strategies have in common is that they require focus on the customer experience.
While there are variations and overlaps, there are five key strategies that provide a useful framework for evaluating the different growth trajectories;
- Brick-and-mortar retailers going online for the first time
- Successful domestic online merchants that optimize eCommerce by diversifying channels and distribution models
- Multi-channel retailers investing in mobile
- Domestic merchants expanding internationally
- Digital merchants delivering omni-channel experiences and expanding into point of sale
Each of these starting points has its own unique challenges. For example, expanding internationally creates a range of unique payment challenges. Cross-border merchants should present prices in the local currency, tailor their fraud prevention systems for local patterns and calculate local sales tax and VAT.
If marketing itself as a local business, a merchant must also translate its online shop into the local language, offer local shipping methods, and accept locally-preferred payment methods. South African merchants may consider one or a combination of these growth strategies, but they must carefully evaluate the ability of their payments vendors to support their chosen strategy as they seek to claim a slice of pie that could be worth $75 billion a year within the next decade.
ACI Worldwide will be discussing the challenges of cross-border eCommerce at the upcoming Seamless Payments conference in South Africa. Please stop by to see us at Booth #30.
Related Blog Posts
Digital Disbursements: The Future of Insurance Customer Relations
In the insurance industry, where the cost of acquiring a new customer is 7 to 9 times more expensive than retaining an old one, strong customer relationships are vital to success. And, in the wake of the COVID-19 pandemic, adapting to customers’ needs is more critical than ever. To remain competitive, providers must continually evolve to meet the growing expectations of today’s insurance policyholder. Despite advancements in payment technology, more than a third of business-to-consumer disbursement payments are still made by check. This can be an expensive and slow process for insurers, especially in comparison to faster payment methods available. Many consumers now expect far more direct and advanced payment processes.
Billing and Payments in 2020: Ten Best Practices to Drive Digital Adoption and Engagement, Help Customers and Reduce Your Costs
In today’s changing times, both consumers and billers are experiencing more stress in managing bills and payments. Consumers may need to make payment arrangements or adjust how they pay their bills if they no longer can pay in person. Meanwhile, billers are scrambling to adjust to taking calls and receiving payments remotely and securely. ACI Worldwide has focused on meeting changing billing and payment needs since 1975, and we’ve compiled a list of best practices to help billers help their customers manage their bills and payments.
Higher Education Payments: Creating a Better Billing Experience for Students, Families and the Institution
For students and their families alike, paying for college may be one of the most stressful situations they can face. According to The Princeton Review’s 2020 College Hopes & Worries Survey Report, more than half of parents expect their child’s college degree—four years of tuition, room & board, fees, books and other expenses—to cost $100,000. Such a large and important cost deserves a corresponding payment system that matches up.
Gen Z Has Arrived. Is Your Business Ready for the Next Generation’s Billing and Payment Preferences?
Move over Millennials, Gen Z has arrived. They’re entering the workforce… and they too have bills to pay.
The largest of any generation, Gen Z is the first to grow up entirely surrounded by the technology that defines today’s world, from smartphones and social media to ubiquitous high-speed internet. This digital exposure has given Gen Zers – the oldest of whom are 22 – distinct digital preferences and, not unlike Millennials, the need for instant gratification.
A New Age of Billing and Payments: Mobile Wallets, AI Technology and Bill Sharing
Growing up in a digital world, Millennial and Gen Z consumers are always connected – and expect immediate access to information. ACI Speedpay Pulse, a consumer billing and payments trends and behaviors survey of more than 3,000 U.S. adults (responsible for two or more household payments a month), found that 99.3 percent of young consumers (defined as those between the ages of 18 and 34) own a smartphone.
The Balancing Act between Security and Customer Experience for Bill Payments
Data breaches involving payment data have doubled in the past year for many reasons—lack of security innovation, misplaced corporate priorities and weaknesses in developer portals to name a few.
What the Combination of Speedpay and ACI Capabilities Means for Today's Bill Payments
Speedpay joined the ACI Worldwide family in 2019, bringing together two bill payment leaders and creating a union based on industry growth through research and development, the highest quality of customer service and expertise, and ground-breaking innovative technology.
Auto Finance Summit 2019: Taking Aim at Fraud and Keeping Up with Technology
ACI Worldwide bill pay experts were recently at the 19th annual Auto Finance Summit in Las Vegas for three days of networking and education with industry leaders in auto lending and leasing. When we weren’t at our booth demoing the ACI Speedpay solution, we were catching up with our peers and attending informative panels and sessions. Here are our top-three takeaways from the show:
How to Maximize the Value of Partnerships Between Fintechs and FIs
The LATAM Open Banking & Fintech Partnership, organized by Connect Global Group, was held earlier this year in Mexico City, and ACI participated as one of the forum partners driving discussions on how to maximize value from collaborative partnerships between FIs and Fintechs. We explored the invaluable benefits of open API and strategies to differentiate the offerings of FIs and Fintechs, address consumer demands, and best practices for implementation aligned to regulatory requirements.
How to Be a Payments Trailblazer – The Seven Habits of Highly Innovative Organizations
The new Culture of Innovation Index from Ovum and ACI identified segments—from banks to intermediaries to merchants to corporates—at the cutting edge (of innovation) across the payments ecosystem. But what is most notable about those segments that have reached ‘trailblazing’ status is the apparent lack of commonality between them. No one segment, nor one region fosters better innovation. In fact, what’s driving these segments/organizations to be best of breed is their own culture of excellence. The only thing they have in common is their attitude.