The Cards and Payments Industry in South Africa: Emerging Trends and Opportunities to 2019

Despite subdued economic growth, the use of payment cards in South Africa is growing at a healthy pace, primarily driven by government financial inclusion plans, the introduction of basic bank accounts, and improved ATMs and POS terminals infrastructure.

Cash, however, continues to be the most preferred payment instrument among South Africans, and is primarily used for small-value transactions. This is primarily a result of the public’s lack of awareness of other payment instruments, and limited access to banking infrastructure, primarily in rural areas.

The South African government is developing programs to better serve the unbanked, and is pressuring banks to do the same. Many South African banks now see the unbanked as a priority – partly in response to government pressure and partly out of growing recognition of the opportunities presented. South Africa’s unbanked population is high, providing opportunities for banks to access a new consumer base by launching low-cost products and opening branches in rural or remote areas.

Banks have introduced a number of products and services for the unbanked population. For instance, Absa Bank, Standard Bank, FNB and Nedbank offer the Mzansi account – a low-cost basic savings account that comes with a debit card. Consumers are only required to provide a valid ID to open an account. Banks are also promoting other low-cost accounts: Standard Bank, for example, offers Access, a zero-balance account with no monthly fee.

Scope

• A comprehensive analysis of South Africa's payments industry

• Current values for South Africa's payments industry, with forecast figures up to 2019

• An analysis of the different demographic, economic, infrastructural and business drivers affecting South Africa's cards and payments industry

• An outline of the current regulatory framework in the industry

• Actionable insight from an analysis of strategies implemented by banks and other financial institutions in the market

• Profiles of the leading players in the South African cards and payments industry

• Insights into payment instruments including: credit transfers, check payments, cash transactions, payment cards and direct debits

• Card fraud analysis in four categories of transgression

• E-commerce market analysis and online payment types in the South African payments industry

Key Highlights

What initiatives are being taken to increase the uptake of mobile POS (mPOS) among small and medium sized merchants in South Africa? What solutions have been launched by leading players Emerge Mobile, Absa Bank and Nedbank? How are these anticipated to drive payment card transaction volumes and values?

Which payment companies are driving the use of alternative payment instruments in South Africa? Which new solutions have been introduced to the market? Which mobile payment (m-payment) solutions enable consumers to pay using QR codes?

In addition to the solutions provided by leading banks, what has also been launched by a key telecom service provider to support the South African government’s financial inclusion plan?

Reasons to buy

• Make more informed business decisions, utilizing GlobalData’s historic and forecast data in each payment category

• Evaluate the key market trends and growth opportunities in South Africa's payments industry and align your value proposition to increase your share of the market

• Assess the competitive dynamics in South Africa's cards and payments industry; enables you to maintain your competitive advantage

• Analyze insights into successful strategies used for various payment instruments in South Africa; adopt those that are aligned to your business objectives and drive your revenue growth

• Ensure cost effective compliance through analysis of the key regulations governing South Africa's cards and payments industry

Companies mentioned

Absa Bank

Standard Bank

First National Bank

Nedbank

American Express

Visa

MasterCard

Diners Club

Table of Contents

1 Definitions and Methodology

1.1 Definitions

1.2 Methodology

2 Key Facts and Events

3 Executive Summary

4 Payment Instruments

4.1 Current Payment Environment

5 E-Commerce

5.1 E-Commerce Market Analysis

6 Alternative Payments

6.1 Alternative Payment Instruments

6.1.1 Cell Pay Point

6.1.2 PayPal

6.1.3 MasterPass

6.1.4 Ukash

6.1.5 FlickPay

6.1.6 SnapScan

6.1.7 Zapper

7 Regulations in the Cards and Payments Industry

7.1 Regulatory Framework

7.1.1 National Credit Act

7.1.2 Interchange fee regulation

7.2 Anti-Money Laundering (AML)

7.3 Foreign Direct Investment (FDI) Regulations

8 Analysis of Cards and Payments Industry Drivers

8.1 Demographic Drivers

8.2 Economic Drivers

8.3 Infrastructure Drivers

8.4 Business Drivers

9 Market Segmentation and New Product Launches

9.1 Market Segmentation and Targeting

9.1.1 Consumer cards

9.1.2 Commercial cards

9.2 New Product Launches

10 Payment Cards

10.1 Payment Cards Market Analysis

10.1.1 Volume and value of payment card transactions by type

10.1.2 Personal vs commercial cards

11 Debit Cards

11.1 Debit Card Market Analysis

11.1.1 Debit card transaction volumes and values by channel

11.1.2 Debit card scheme and issuer shares in terms of transaction value

11.1.3 Debit cards comparison

12 Credit Cards

12.1 Credit Card Market Analysis

12.1.1 Credit card transaction volumes and values by channel

12.1.2 Credit card scheme and issuer shares in terms of transaction value

12.1.3 Credit cards comparison

13 Charge Cards

13.1 Charge Card Market Analysis

13.1.1 Charge card transaction volumes and values by channel

13.1.2 Charge card scheme shares in terms of transaction value

13.1.3 Charge cards comparison

14 Commercial Cards

14.1 Commercial Card Market Analysis

14.1.1 Commercial cards comparison

15 Card Fraud Statistics

15.1 Card Fraud Analysis

16 Card Issuers

16.1 Absa Bank

16.2 Standard Bank

16.3 First National Bank

16.4 Nedbank

17 Prepaid Cards

17.1 Prepaid Card Market Analysis

17.1.1 Prepaid cards comparison

18 Merchant Acquiring

18.1 Merchant Acquiring Market Analysis

19 Appendix

19.1 Tables

19.2 Contact GlobalData

19.3 About GlobalData

19.4 GlobalData’s Services

19.5 Disclaimer

List of Tables

Table 1: Key Definitions

Table 2: Annual Average Exchange Rate

Table 3: South Africa – Key Facts, 2014

Table 4: Regional Benchmarking of South African Payment Cards, 2014

Table 5: South Africa – Interchange Rates

Table 6: South Africa – Interchange Fees

Table 7: South Africa – Mode of Entry of Foreign Banks

Table 8: Cards for High-Income Consumers, 2016

Table 9: Cards for Low-Income Consumers, 2016

Table 10: Cards for Travelers, 2016

Table 11: Cards for Students and Young Population, 2016

Table 12: Commercial Cards Comparison and Key Features, 2016

Table 13: South Africa – New Product Launches

Table 14: South Africa – Pay Now, Average Interchange Fees: Intra-Network Transactions (%), 2010–2014

Table 15: South Africa – Pay Now, Average Merchant Service Charge: Domestic Transactions (%), 2010–2019

Table 16: South Africa – Basic Bank Accounts, 2016

Table 17: South Africa – Small Business Current Accounts, 2016

Table 18: South Africa – Debit Cards Comparison and Key Features, 2016

Table 19: South Africa – Pay Later, Average Interchange Fees: Intra-Network Transactions (%), 2010–2014

Table 20: South Africa – Pay Later, Average Merchant Service Charge: Domestic Transactions (%), 2010–2019

Table 21: South Africa – Gold Credit Cards Comparison and Key Features, 2016

Table 22: South Africa – Premium Credit Cards Comparison and Key Features, 2015

Table 23: South Africa – Charge Cards Comparison and Key Features, 2016

Table 24: South Africa – Commercial Cards Comparison and Key Features, 2016

Table 25: South Africa – Prepaid Cards Comparison and Key Features, 2016

Table 26: South Africa – Payment Instrument Transaction Values (ZAR Billion), 2010–2014

Table 27: South Africa – Payment Instrument Transaction Values (US$ Billion), 2010–2014

Table 28: South Africa – Payment Instrument Transaction Volumes (Million), 2010–2014

Table 29: South Africa – Number of Payment Cards in Circulation by Type (Million), 2010–2019

Table 30: South Africa – Volume of Payment Card Transactions by Type (Million), 2010–2019

Table 31: South Africa – Value of Payment Card Transactions by Type (ZAR Billion), 2010–2019

Table 32: South Africa – Value of Payment Card Transactions by Type (US$ Billion), 2010–2019

Table 33: South Africa – Personal and Commercial Card Transaction Volumes (Million), 2010–2019

Table 34: South Africa – Personal and Commercial Card Transaction Values (ZAR Billion), 2010–2019

Table 35: South Africa – Personal and Commercial Card Transaction Values (US$ Billion), 2010–2019

Table 36: South Africa – Number of Debit Cards in Circulation (Million), 2010–2019

Table 37: South Africa – Debit Card Transaction Volumes and Frequency by Channel, 2010–2019

Table 38: South Africa – Debit Card Total and Average Transaction Values by Channel, 2010–2019

Table 39: South Africa – Debit Card Total and Average Transaction Values by Channel, 2010–2019

Table 40: South Africa – Number of Debit Cards in Circulation by Scheme (Million), 2010–2014

Table 41: South Africa – Debit Card Transaction Values by Scheme (ZAR Billion), 2010–2014

Table 42: South Africa – Debit Card Transaction Values by Scheme (US$ Billion), 2010–2014

Table 43: South Africa – Debit Card Transaction Values by Issuer (ZAR Billion), 2010–2014

Table 44: South Africa – Debit Card Transaction Values by Issuer (US$ Billion), 2010–2014

Table 45: South Africa – Number of Credit Cards in Circulation (Million), 2010–2019

Table 46: South Africa – Credit Card Transaction Volumes and Frequency by Channel, 2010–2019

Table 47: South Africa – Credit Card Total and Average Transaction Values by Channel, 2010–2019

Table 48: South Africa – Credit Card Total and Average Transaction Values by Channel, 2010–2019

Table 49: South Africa – Number of Credit Cards in Circulation by Scheme (Thousand), 2010–2014

Table 50: South Africa – Credit Card Transaction Values by Scheme (ZAR Billion), 2010–2014

Table 51: South Africa – Credit Card Transaction Values by Scheme (US$ Billion), 2010–2014

Table 52: South Africa – Pay Later Card Transaction Values by Issuer (ZAR Billion), 2010–2014

Table 53: South Africa – Pay Later Card Transaction Values by Issuer (US$ Billion), 2010–2014

Table 54: South Africa – Credit Card Balances Outstanding by Issuer (ZAR Billion), 2010–2014

Table 55: South Africa – Credit Card Balances Outstanding by Issuer (US$ Billion), 2010–2014

Table 56: South Africa – Number of Charge Cards in Circulation (Thousand), 2010–2019

Table 57: South Africa – Charge Card Transaction Volumes and Frequency by Channel, 2010–2019

Table 58: South Africa – Charge Card Total and Average Transaction Values by Channel, 2010–2019

Table 59: South Africa – Charge Card Total and Average Transaction Values by Channel, 2010–2019

Table 60: South Africa – Number of Charge Cards in Circulation by Scheme (Thousand), 2010–2014

Table 61: South Africa – Charge Card Transaction Values by Scheme (ZAR Billion), 2010–2014

Table 62: South Africa – Charge Card Transaction Values by Scheme (US$ Million), 2010–2014

Table 63: South Africa – Number of Commercial Cards in Circulation (Thousand), 2010–2019

Table 64: South Africa – Commercial Card Transaction Values (ZAR Billion), 2010–2019

Table 65: South Africa – Commercial Card Transaction Values (US$ Billion), 2010–2019

Table 66: South Africa – Card Fraud (ZAR Million), 2010–2014

Table 67: South Africa – Card Fraud (US$ Million), 2010–2014

Table 68: South Africa – Number of Prepaid Cards in Circulation (Million), 2010–2019

Table 69: South Africa – Prepaid Card Transaction Values (ZAR Billion), 2010–2019

Table 70: South Africa – Prepaid Card Transaction Values (US$ Billion), 2010–2019

Table 71: South Africa – Merchant Acquiring Transaction Volumes by Channel (Billion), 2010–2019

Table 72: South Africa – Merchant Acquiring Transaction Values (ZAR Billion), 2010–2019

Table 73: South Africa – Merchant Acquiring Transaction Values (US$ Billion), 2010–2019

Table 74: South Africa – Acquirers’ Transaction Volumes (Million), 2010–2014

Table 75: South Africa – Acquirers’ Transaction Values (ZAR Billion), 2010–2014

Table 76: South Africa – Acquirers’ Transaction Values (US$ Billion), 2010–2014

Table 77: South Africa – Retail Outlets and Merchant Accounts (Thousand), 2010–2019

List of Figures

Figure 1: South Africa – Payment Instrument Shares by Transaction Value (%), 2010 and 2014

Figure 2: South Africa – Payment Instrument Shares by Transaction Volume (%), 2010 and 2014

Figure 3: South Africa – E-Commerce Value (US$ Billion) and Payment Types (%)

Figure 4: South Africa – Total Population and Structure

Figure 5: South Africa – Economic Indicators

Figure 6: South Africa – Number of ATMs, POS Terminals and Banking Composition

Figure 7: South Africa – Real Household Consumption

Figure 8: South Africa – Segmentation by Card Type, 2016

Figure 9: South Africa – Growth in Payment Card Transaction Values and Number of Cards in Circulation by Type, 2010–2019

Figure 10: South Africa – Volume and Value of Payment Card Transactions by Type (%), 2010–2019

Figure 11: South Africa – Personal and Commercial Card, Transaction Volumes and Values (%), 2010–2019

Figure 12: South Africa – Growth in Debit Card Transaction Values and Number of Debit Cards in Circulation, 2010–2019

Figure 13: South Africa – Debit Card Transaction Volumes and Values by Channel, 2010–2019

Figure 14: South Africa – Debit Card Scheme and Issuer Shares in Terms of Transaction Value (%), 2014

Figure 15: South Africa – Growth in Credit Card Transaction Values and Number of Credit Cards in Circulation, 2010–2019

Figure 16: South Africa – Credit Card Transaction Volumes and Values by Channel, 2010–2019

Figure 17: South Africa – Credit Card Scheme and Issuer Shares in Terms of Transaction Value (%), 2014

Figure 18: South Africa – Growth in Charge Card Transaction Values and Number of Charge Cards in Circulation, 2010–2019

Figure 19: South Africa – Charge Card Transaction Volumes and Values by Channel, 2010–2019

Figure 20: South Africa – Charge Card Scheme Shares in Terms of Transaction Value (%), 2014

Figure 21: South Africa – Number of Commercial Cards in Circulation and Transaction Value, 2010–2019

Figure 22: South Africa – Shares of Various Types of Card Fraud in Terms of Transaction Value (%), 2010 and 2014

Figure 23: South Africa – Number of Prepaid Cards in Circulation and Transaction Value, 2010–2019

Figure 24: South Africa – Merchant Acquiring Transaction Volume and Value, 2010–2019

Figure 25: South Africa – Acquirers’ Market Share in Terms of Transaction Volume and Value (%), 2014

Figure 26: South Africa – Number of Retail Outlets and Total Merchant Accounts (Thousand), 2010–2019

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