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
Learning Lessons From Large Scale Breaches
At this point, there’s no ignoring it: our financial security is compromised daily. And no doubt, many reading this wouldn’t hesitate to recount all the breaches they have been a part of as consumers; merchant breaches in which replacement cards forced you to update your linked accounts, or data compromises where personal information was stolen and identity theft protection was provided, forcing you to consider freezing new credit originations.
What Australia’s $639m CNP Fraud Problem Means for Retailers
In my role at ACI Worldwide, my fellow fraud consultants and I constantly share information from all corners of the globe. One recent bit of intelligence that immediately caught my eye, and I shared with colleagues across the world, was the staggering cost of card-not-present (CNP) fraud here in Australia.
CNP fraud accounts for 78% of all payments-related fraud in Australia. And to say it is a challenge for retailers—and the industry as a whole—is a vast understatement. With the astounding growth in eCommerce sales, this is not a problem in decline; it is rising aggressively and shows no signs of abating.
PSD2 Carries Over to the U.S. – Thanks to the Phone in Your Hand
Let me ask you a favor. Could you put down your phone for just a minute? Unless, of course, you’re reading this on your mobile device.
It can be an uphill battle asking someone to put down their phone these days. I have a tween, so I know the struggle! One of the reasons we’re so reticent to do so is the sheer power contained within these devices. At this point, it controls the music, the temperature, the locks and even the lighting in your home, and that’s not even touching on its entertainment value, or its capabilities as a payment device. The device, in its present form, has been around for ten years now, and in 2017, it’s safe to say there’s no going back.
Filtering the Fraudster
In our new Insight Paper, we focus on how merchants can build an effective fraud filter for their sales funnel – one that is not over-restrictive, leads to genuine sales being accepted, and prevents genuine fraud. Get the balance right and merchants stand to improve their checkout conversion rates and boost their bottom line.
Stop Fraud… Or Increase Conversion Rates? With a Fine-Tuned Fraud Engine, Merchants Can Do Both
Preventing fraud and driving high conversion rates are universally important objectives for merchants – but many struggle to adequately balance these two demands. They either employ aggressive fraud prevention strategies to minimize fraud losses, or conversely, reduce checks in order to prevent false positives, improve customer experience and ensure sales targets are met. Neither exclusive approach works in the long run; focusing on only one will prove costly on multiple fronts.
ETA TRANSACT: Time To Break Out… And Cross Borders To Reach New Customers
It’s before lunch on day one of ETA Transact17 in Las Vegas; exhibitors are still putting the finishing touches on their stands in the main hall, so it’s the perfect opportunity to sit in on some of the breakout sessions, part of the educational program put on by the Electronic Transactions Association. And ‘breakout session’ seems particularly apt in this case, as panelists from ACI Worldwide, Planet Payment, and arvato launch into a discussion on how merchants and payment providers can ‘break out’ of their domestic markets and take advantage of the huge opportunity in cross-border eCommerce.
Rise Of The Machine Learning and Fraud Prevention
Machine learning, as a sub-discipline within computer science, is primarily concerned with the discovery of patterns in data through algorithms that can learn from and make predictions on that data. These algorithms operate by building a model based on example inputs, which can then make data-driven predictions or decisions. So what, exactly, does this have to do with beating fraud in the real world?
How Fraudulent Are Singapore-issued Cards?
While eCommerce continues to bloom globally, it is still outpaced by growth in total fraud losses. In 2015, total losses from card fraud increased by 19 percent over the previous year, while the overall card transaction volume grew by only 15 percent. But what’s the picture at the local level? Specifically, are Singapore-issued credit cards–in a domestic market that has strict laws and financial regulation–spared from this exposure and risk?
Peak Trading Is About More Than Black Friday And Cyber Monday
Many merchants will have now experienced their biggest single trading day of the year, either Black Friday or Cyber Monday, and alongside these peak trading days have focused their efforts on effective fraud managements and delivering a seamless and secure checkout experience. However, this is not universally the peak for all merchants.
Six Steps To Optimizing Fraud Management During Peak Trading
A well planned and thought out fraud management strategy can increase revenue by more than 20 percent, so with the holiday shopping season – including traditional peak days Black Friday and Cyber Monday – we encourage merchants to consider the following practical steps in order to maximize their success.