The Cards and Payments Industry in South Africa: Emerging trends and opportunities to 2020

GlobalData’s "The Cards and Payments Industry in South Africa: Emerging trends and opportunities to 2020" report provides detailed analysis of market trends in the South African cards and payments industry. It provides values and volumes for a number of key performance indicators in the industry, including credit transfers, payment cards, cash, direct debits, and cheques during the review-period (2012-16e).

The report also analyzes various payment card markets operating in the industry, and provides detailed information on the number of cards in circulation, transaction values and volumes during the review-period and over the forecast-period (2016-20f). It also offers information on the country's competitive landscape, including the market shares of issuers and schemes.

The report brings together GlobalData’s research, modeling, and analysis expertise to allow banks and card issuers to identify segment dynamics and competitive advantages. The report also covers details of regulatory policy and recent changes in the regulatory structure.

This report provides top-level market analysis, information and insights into the South African cards and payments industry, including –

– Current and forecast values for each market in the South African cards and payments industry, including debit, credit, and charge cards.

– Detailed insights into payment instruments including credit transfers, cash, cheques, direct debit, and payment cards. It also, includes an overview of the country's key alternative payment instruments.

– E-commerce market analysis and payment methods.

– Analysis of various market drivers and regulations governing the South African cards and payments industry.

– Detailed analysis of strategies adopted by banks and other institutions to market debit, credit, and charge cards.

Scope

– Visa and Mastercard have introduced their own payment solutions to push electronic payments in the country. In July 2014, Mastercard launched the Masterpass digital wallet in South Africa, in association with Standard Bank. Masterpass users can shop online without giving payment and shipping information with every purchase. Meanwhile in September 2016 Visa launched Visa Checkout. The new service requires a username and password to make a payment, as opposed to credit card details and an expiry date for each transaction.

– Banks and regulatory bodies are implementing new technology to curb card fraud. In July 2016, the Payments Association of South Africa (PASA), in association with Visa and Mastercard, introduced a new specification for biometric authentication for card-based payments. The framework facilitates open interoperability solutions and allows a range of biometric solutions such as fingerprint, palm, voice, iris, and facial biometrics. Eventually all transactions will be biometric-authenticated, which includes confirmation of transactions through customers’ fingerprints. In line with this, Mastercard and Visa designed a framework for biometric authentication of transactions.

– To control growing consumer debt and payment defaults, the South African government amended the NCA in May 2014 to include new measures that card issuers need to follow while offering credit facilities. The measures were implemented from March 2015. Banks are now required to analyze customers’ income and take all monthly debt repayment obligations into account before offering credit facilities. However, the measures had little impact on the fast-growing credit card market, as consumers are increasingly using credit cards as a temporary source of disposable income. Low interest rates in comparison with personal loans, installment facilities, flexible repayment options, and long interest-free credit periods are some of the factors driving credit card growth.

Reasons to buy

– Make strategic business decisions, using top-level historic and forecast market data, related to the South African cards and payments industry and each market within it.

– Understand the key market trends and growth opportunities in the South African cards and payments industry.

– Assess the competitive dynamics in the South African cards and payments industry.

– Gain insights into marketing strategies used for various card types in South Africa.

– Gain insights into key regulations governing the South African cards and payments industry.

Companies mentioned

Absa Bank

Standard Bank

FirstRand Bank

Nedbank

Capitec Bank

First National Bank

Visa

Mastercard

American Express

Diners Club

Table of Contents

Table of Contents

1. EXECUTIVE SUMMARY 2

1.1. Market overview 2

1.2. Key facts 4

1.3. Top five industry events 5

2. PAYMENT INSTRUMENTS 11

2.1. Current payment environment 11

3. E-COMMERCE AND ALTERNATIVE PAYMENTS 13

3.1. E-commerce market analysis 13

3.2. Alternative payment solutions 15

3.2.1. PayPal 15

3.2.2. Masterpass 15

3.2.3. Visa Checkout 15

3.2.4. Zapper 15

3.2.5. SnapScan 16

3.2.6. FlickPay 16

3.2.7. Cell Pay Point 16

3.2.8. Ukash 16

3.2.9. VCpay 16

3.2.10. Instant Money 17

4. REGULATIONS IN THE CARDS AND PAYMENTS INDUSTRY 18

4.1. Regulatory framework 18

4.2. AML 18

4.3. FDI regulations 19

5. ANALYSIS OF CARDS AND PAYMENTS INDUSTRY DRIVERS 20

6. PAYMENT CARDS 23

7. DEBIT CARDS 25

7.1. Debit card market analysis 25

7.2. Competition in the debit card market 27

7.3. Debit cards comparison 29

8. PAY-LATER CARDS 30

8.1. Pay-later card market analysis 30

8.2. Competition in the pay-later card market 32

8.3. Pay-later cards comparison 34

9. PREPAID CARDS 36

10. MERCHANT ACQUIRING 38

11. APPENDIX 41

11.1. Abbreviations and acronyms 41

11.2. Supplementary data 42

11.3. Definitions 55

11.4. Methodology 57

11.5. Bibliography 59

11.6. Further reading 59

List of Tables

List of Tables

Table 1: South Africa: key facts, 2016 4

Table 2: South Africa: regional benchmarking of payment cards, 2016 4

Table 3: South Africa: mode of entry of foreign banks 19

Table 4: South Africa: debit cards comparison and key features, 2016 29

Table 5: South Africa: gold credit cards comparison and key features, 2016 34

Table 6: South Africa: premium credit cards comparison and key features, 2016 35

Table 7: South Africa: charge cards comparison and key features, 2016 35

Table 8: South Africa: payment instrument transaction values (ZARtn), 2012-16e 42

Table 9: South Africa: payment instrument transaction values ($bn), 2012-16e 42

Table 10: South Africa: payment instrument transaction volumes (millions), 2012-16e 42

Table 11: South Africa: payment cards in circulation by type (millions), 2012-20f 42

Table 12: South Africa: volume of payment card transactions (millions), 2012-20f 43

Table 13: South Africa: value of payment card transactions (ZARbn), 2012-20f 43

Table 14: South Africa: value of payment card transactions ($bn), 2012-20f 43

Table 15: South Africa: debit cards in circulation (millions), 2012-20f 43

Table 16: South Africa: debit card transaction volumes, 2012-20f 44

Table 17: South Africa: debit card transaction values (ZAR), 2012-20f 44

Table 18: South Africa: debit card transaction values ($), 2012-20f 44

Table 19: South Africa: debit cards in circulation by scheme (millions), 2012-16e 45

Table 20: South Africa: debit card transaction values by scheme (ZARbn), 2012-16e 45

Table 21: South Africa: debit card transaction values by scheme ($bn), 2012-16e 45

Table 22: South Africa: debit card transaction values by issuer (ZARbn), 2012-16e 45

Table 23: South Africa: debit card transaction values by issuer ($bn), 2012-16e 45

Table 24: South Africa: pay-later cards in circulation (millions), 2012-20f 46

Table 25: South Africa: pay-later card transaction volumes, 2012-20f 46

Table 26: South Africa: pay-later card transaction values (ZAR), 2012-20f 46

Table 27: South Africa: pay-later card transaction values ($), 2012-20f 46

Table 28: South Africa: pay-later cards in circulation by scheme (000s), 2012-16e 47

Table 29: South Africa: pay-later card transaction values by scheme (ZARbn), 2012-16e 47

Table 30: South Africa: pay-later card transaction values by scheme ($bn), 2012-16e 47

Table 31: South Africa: pay-later card transaction values by issuer (ZARbn), 2012-16e 47

Table 32: South Africa: pay-later card transaction values by issuer ($bn), 2012-16e 48

Table 33: South Africa: credit cards in circulation (millions), 2012-20f 48

Table 34: South Africa: credit card transaction volumes, 2012-20f 48

Table 35: South Africa: credit card transaction values (ZAR), 2012-20f 48

Table 36: South Africa: credit card transaction values ($), 2012-20f 49

Table 37: South Africa: credit cards in circulation by scheme (000s), 2012-16e 49

Table 38: South Africa: credit card transaction values by scheme (ZARbn), 2012-16e 49

Table 39: South Africa: credit card transaction values by scheme ($bn), 2012-16e 49

Table 40: South Africa: charge cards in circulation (000s), 2012-20f 49

Table 41: South Africa: charge card transaction volumes, 2012-20f 50

Table 42: South Africa: charge card transaction values (ZAR), 2012-20f 50

Table 43: South Africa: charge card transaction values ($), 2012-20f 50

Table 44: South Africa: charge cards in circulation by scheme (000s), 2012-16e 51

Table 45: South Africa: charge card transaction values by scheme (ZARbn), 2012-16e 51

Table 46: South Africa: charge card transaction values by scheme ($m), 2012-16e 51

Table 47: South Africa: prepaid cards in circulation (millions), 2012-20f 51

Table 48: South Africa: prepaid card transaction values (ZARbn), 2012-20f 51

Table 49: South Africa: prepaid card transaction values ($m), 2012-20f 51

Table 50: South Africa: merchant acquiring transaction volumes (millions), 2012-20f 52

Table 51: South Africa: merchant acquiring transaction values (ZARbn), 2012-20f 52

Table 52: South Africa: merchant acquiring transaction values ($bn), 2012-20f 52

Table 53: South Africa: acquirers’ transaction volumes (millions), 2012-16e 52

Table 54: South Africa: acquirers’ transaction values (ZARbn), 2012-16e 53

Table 55: South Africa: acquirers’ transaction values ($bn), 2012-16e 53

Table 56: South Africa: retail outlets and card-accepting merchants (000s), 2012-20f 53

Table 57: South Africa: debit card average interchange fees (%), 2012-16e 53

Table 58: South Africa: debit card MSC and interchange fee (%), 2012-20f 53

Table 59: South Africa: pay-later card average interchange fees (%), 2012-16e 54

Table 60: South Africa: pay-later card MSC and interchange fee (%), 2012-20f 54

Table 61: Key definitions 55

List of Figures

List of Figures

Figure 1: South Africa: payment instrument shares by transaction value (%), 2012 vs 2016 11

Figure 2: South Africa: payment instrument shares by transaction volume (%), 2012 vs 2016 12

Figure 3: South Africa: e-commerce market value 13

Figure 4: South Africa: population and economic indicators 20

Figure 5: South Africa: ATMs, POS terminals, and household consumption 21

Figure 6: South Africa: payment card transaction value and cards in circulation, 2012-20f 23

Figure 7: South Africa: debit card penetration and turnover per card 25

Figure 8: South Africa: debit card scheme and issuer transaction value share, 2016 27

Figure 9: South Africa: pay-later card penetration and turnover per card 30

Figure 10: South Africa: pay-later card scheme and issuer transaction value share, 2016 32

Figure 11: South Africa: prepaid cards in circulation and transaction value, 2012-20f 36

Figure 12: South Africa: merchant acquiring transaction volume and value, 2012-20f 38

Figure 13: South Africa: acquirers’ market share in terms of transaction volume and value (%), 2016 39

Figure 14: South Africa: average merchant service charge and interchange fee (%), 2012-20f 40

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