Absa, SA’s largest retail bank, is to roll out contactless payment systems by the end of this year.
Supported at first by cards that are equipped to make payments by means of tapping them on a reader, these same readers will eventually be able to accept payments from devices like smartphones that are enabled for near-field communications (NFC) technology.
Absa also plans to extend the functionality of its point of sale (POS) machines in retailers to allow for both deposits and withdrawals in addition to basic banking services like balance enquiries and prepaid purchases.
These steps are all part of what Absa is calling its long-term strategy to add mobility and convenience, particularly for small payments at first. The bank is also in talks with transit operators, particularly taxi companies, to roll out contactless payment solutions for public transport.
Rival Standard Bank is also using contactless payments systems and is testing NFC technology, most recently at the Oppikoppi music festival.
Absa reckons POS terminals will move from chip-based cards to NFC solutions — whether in cards or mobile phones — and expects consumers to make the same migration from chips to NFC.
The bank says its relationship with Barclays in the UK is helping to drive innovation at the company by offering it a perspective on global trends in mobile payments and banking.
Cowyk Fox, chief information officer for Absa Card, says the bank is seeing a shift away from credit cards to debit-based facilities and adds its expanded options in this area mean those without credit cards will be able to shop online.
Fox says introducing new forms of payment like “tap-and-go” payment solutions presents a “chicken-and-egg problem” because consumers won’t adopt the technology before payment points are widespread. Retailers have the same reservations about installing payment points until the cards that support the technology are in enough hands to justify the expense.
He says digital transacting is good for both retailers and consumers because it is secure, cheaper for both parties and more convenient. “Consumers shouldn’t think about how payments work, they should just happen,” says Fox.
Tap-and-go payments allow consumers to make low value purchases — be they in retailers or for public transport — by tapping the contactless-enabled cards against a reader. At first, these transactions will be limited to R200/day and users will be able to load a maximum of R1 500 on the card at any one time. The total monthly transactional limit is R3 000.
Simon Just, Absa Card’s head of consumer issuing services, says increased debit card usage can also be attributed to the move away from carrying cash. He says the bank is rolling out “multi-application cards” that allow consumers to access any of their accounts from a single card.
Absa is also offering general-purpose prepaid cards which can be used by temporary workers or similar, where a flat fee is paid at the time of deposit and no further fees are payable until the next deposit.
In a similar vein, the bank now offers “corporate prepaid disbursement” solutions, where company-branded cards (reusable or single use) can be issued to employees. Just says 170 000 such cards have been issued and that the transactions through these will soon exceed R500m.
In terms of contactless or tap-and-go solutions, Just says Absa has begun rolling out prepaid standalone cards for use in transit industries such as minibus taxis and buses. Standard Bank recently launched a contactless payment system for use on transport infrastructure in Durban.
Absa hopes to encourage retailers near transit hubs to embrace the technology and install the necessary hardware in their stores, which should help to drive consumer uptake.
Just says the similarities between the chips found in bankcards and Sim cards mean there are “similar application structures between both kinds of cards” and that “there are many ways to take card functionality to phones”.
He says Absa plans to have 4 000 tap-and-go devices in service by the middle of next year. He adds that Absa will make announcements about its plans for NFC before the end of the year but won’t elaborate before the official announcement. NFC devices will be able to use the same tap-and-go devices that Absa has begun to deploy for its new range of cards.
In the short term, Absa predicts a gradual move to mobile wallets for simple banking, and then sees this expanding to tickets, vouchers and coupons.
Absa is also planning to launch a debit card aimed at “young professionals or recent graduates” that will include built-in NFC and a built-in dynamic PIN generator for online purchases. — Craig Wilson, TechCentral
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