Whereas merchants and industry usually push digital innovation, consumers are driving merchants to innovate in online payments.
The proliferation of digital tools is upending the online payments space, with consumers now driving the pace of innovation by forcing merchants to adopt their preferred payment methods instead of the other way round.
This is according to Mpho Sadiki, MD for merchant services in Africa at Network International and its subsidiary, Payfast.
“Consumers engage with something somewhere and they want it, so they then go to the merchant and say, ‘Hey, why don’t you offer this?’ Merchants want the business, so they accommodate the requests,” Sadiki said in an interview following the launch of Payfast’s State of the Pay 2025 report at the company’s Johannesburg offices on Thursday.
“So, then we get this wave of merchants who ask us to add things like digital wallets, embedded finance and cryptocurrency payment options on their platforms. Digital adoption for in-person payments is largely merchant driven because it is the merchant who forces customers to adapt by proclaiming that they no longer accept cash. In online payments, it is the other way round, and it is the buyer who drives a lot of the innovation.”
Payments landscape
Now in its fifth edition, Payfast’s State of the Pay report aims to provide an overview of South Africa’s payments landscape by collating payment data from Payfast’s ecosystem, online surveys of merchants and consumers, and in-depth interviews with industry experts. The 2025 edition was compiled in collaboration with online credit solutions provider Mobicred and digital challenger bank TymeBank.
Sadiki explained that the rise in customers preferring digital payment methods has been influenced by the advent of open banking APIs, which have had a profound impact on reducing trust barriers. Key to this is the level of control customers have during the transaction, supported by push notifications – a form of two-factor authentication – via their banking apps that give them the security that no transaction can go through on their account without their approval.
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Sadiki said significant investments in marketing by the likes of Payfast and its competitors in the payments industry have contributed to higher levels of consumer awareness, also leading to higher levels of trust among consumers.
According to the report, card payments still dominate as the preferred payment method by South Africans in both online and in-person interactions. In 2025, cards accounted for 68% of transactions, followed by open banking (28%), mobile wallets like Apple Pay and Samsung Pay (5%), and QR codes like Snapscan (4%).
“Cards still lead but show signs of decline as consumers seek flexibility. Instant EFT and open banking are growing rapidly for online purchases, while mobile wallets and buy now, pay later (BNPL) are emerging as preferred options for convenience and budgeting,” said the report.
Sadiki said BNPL doubled its share of total payment volumes from just 3% in 2024 to 6% in 2026. The average basket size for BNPL purchases was R1 568, according to the report.
Sadiki said embedded financing solutions like BNPL that are conveniently presented to users at checkout are gaining traction, with 32% of survey respondents reporting they had made use of a credit facility like those offered by Mobicred at checkout.
Modernisation
“While this doesn’t confirm overall growth in credit use, it does point to the rising influence of affordability tools in shaping online payment behaviour,” he said.
As South Africa’s payments industry looks to 2026 and beyond, Sadiki predicts two factors will have the greatest impact on innovation in the payments landscape: the Reserve Bank’s payments ecosystem modernisation programmed and the rise of agentic AI.
Sadiki said Payfast – a founding member of Asapp (Association of South African Payment Providers) – has been working closely with the regulator and other stakeholders to develop the framework that will govern access to the country’s payments and settlements systems for non-bank players such as fintechs and retailers.
He said the overall effect of direct access for these smaller players will be increased innovation and lower prices for consumers.
“By having fintech’s enter [the system] through someone else, you are immediately adding a cost barrier because there is a cost layer there which leads to you then price uncompetitively.
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“The other thing is you are forced to innovate at the pace at which your sponsor innovates, so if you develop a product and they are not ready to consume it, then you cannot deploy it, meaning consumers cannot enjoy that innovation either,” said Sadiki. – © 2026 NewsCentral Media
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