DUE largely to the digital revolution, making payments is not as cumbersome it was two decades ago. Chequebooks checked out years ago. The genesis of the electronic funds transfer (EFT) means banking hours no longer apply and it is rarely necessary to visit a branch.
Debit cards have increasingly replaced cash and credit cards at the till. But the evolution is far from over with payments on smartphones gaining momentum — giving weight to speculation that cash will one day crash and become obsolete.
Given the pace at which change occurs, and aware of the prevalence of all things digital in their customers’ lives, banks are under ever more pressure to move with the times, move fast and keep moving.
Some banks acknowledge that the pace of innovation and high levels of specialisation require outsourcing expertise.
This is how a Stellenbosch-based technology incubator, FireID, whose homepage features a barefoot programmer in khaki shorts lying on a couch as he works on his laptop, is helping light the technology fire for one of the country’s oldest and largest financial institutions, Standard Bank.
"Companies like FireID have a very different culture and view of the world compared to a large corporate like Standard Bank," says John Campbell, chief operations officer of Standard Bank’s innovation department, Beyond Payments, which first worked with FireID on a payment product for Mxit in 2012.
"This allows for a fresh approach to the world — particularly the future world — and consumers, which allows us to be proactive in developing new products. We partner on the objectives and leave it to them to solve and improve while we focus on the financial and regulatory aspects."
...
FIREID was established as a software security company for the banking industry in 2011 by five people who met while studying subjects including computer science, journalism and philosophy at the University of Stellenbosch.
These days, the company comprises 32 people who work across several industries to help clients take advantage of new technology trends.
Among FireID’s products is the mobile payment application (app) SnapScan that was developed in partnership with Standard Bank to allow customers (from any of SA’s banks) make cashless and cardless payments using their phones.
The app, which celebrated its first birthday last week, is used by more than 100,000 consumers at about 18,000 merchants countrywide.
"There are hundreds of thousands of merchants without access to formal card-acquiring facilities or who can’t afford existing products," says co-founder and CEO of SnapScan, Kobus Ehlers. "In developing the app, we looked at ways in which technology could be used to expand access for these merchants.
"We knew it was key not only to design a cool piece of technology, but also to address a real-world problem. Then we asked the question: ’Wouldn’t it be cool if you could pay for your coffee using your phone … (and had) the added security of not having to hand your card over or carry cash around with you?’ That’s where the idea came from."
Mobile payment is not a new idea, he says; the technology has existed for years — even in SA. The difficult part was taking that technology and turning it into a product that makes sense in SA — and then getting the product on to the market.
"Low-cost mobile wallets, like M-Pesa, work spectacularly well in countries such as Kenya, but struggle to get a foothold here," says Ehlers.
"On the other hand, products like Square or Apple Pay do not yet operate here, possibly because of the different commercial or regulatory environment. Payments are intensely personal and need to be customised to fit a specific set of consumers."
In developing SnapScan, Ehlers and his colleagues saw that, while many consumers have smartphones (particularly those with cash to spend), a significant number of merchants use feature phones, which lack the advanced functionality of smartphones.
"That meant any solution that ‘plugs into’ a smartphone would have limited reach," he says. "In fact, we selected the most boring technology out there — that is, QR (Quick Response) codes — exactly because they are free, unless you count the cost of printing a piece of paper, and it requires no electricity or expensive point-of-sale system to work. This means that anyone can start accepting electronic payments."
Merchants can sign up for SnapScan within minutes and thereafter are charged a 3% transaction fee. Consumers use the app to scan the SnapCode displayed by the merchant and confirm the transaction with their PIN.
Their credit card is immediately debited and the merchant receives the funds instantly.
That SnapScan is accessible to other banks — the competition — is strategic to Standard Bank. "We ultimately serve people and people have pretty much the same requirements," says Campbell.
"Competitive advantage should be predicated on the quality of service delivery and not a piece of technology, because any technological advantage is short-lived. We plan to launch more products focused on servicing customers irrespective of their traditional banking relationship."
...
SNAPSCAN has also undertaken several unusual projects. The company works with Street Parking Solutions and the City of Cape Town so that motorists can use SnapScan to pay parking marshals who are equipped with SnapCodes attached to lanyards and who carry phones to confirm payments are successful.
Vendors of Cape Town’s Big Issue, a magazine published on behalf of and sold by disadvantaged people, are also able to accept electronic SnapScan payments following the same procedure. Those who do not have access to bank accounts are issued with cash vouchers, which can be redeemed at Standard Bank ATMs and participating stores.
The Standard Bank-FireID partnership is mutually beneficial, says Ehlers. "FireID and Standard Bank have had a long-standing relationship having worked together on other projects before SnapScan.
"It is a powerful relationship in that it plays to the strengths of both parties. FireID can bring rapid (and radical) innovation and a new focus on customer experiences, whereas Standard Bank brings decades of knowledge about banking and trust.
"We’ve seen the benefit of combining the infrastructure, consumer trust and influence of a big South African bank with the agility of a small, start-up team. It runs deeper than that, of course; there is a lot of technical expertise and experience within the bank that we’ve been able to benefit from."
Founder and CEO of SnapScan Kobus Ehlers says the agility of a small start-up team combining with a big bank is a mutually beneficial partnership that plays to the strengths of both parties. Picture: JOHAN WILKE
DUE largely to the digital revolution, making payments is not as cumbersome it was two decades ago. Chequebooks checked out years ago. The genesis of the electronic funds transfer (EFT) means banking hours no longer apply and it is rarely necessary to visit a branch.
Debit cards have increasingly replaced cash and credit cards at the till. But the evolution is far from over with payments on smartphones gaining momentum — giving weight to speculation that cash will one day crash and become obsolete.
Given the pace at which change occurs, and aware of the prevalence of all things digital in their customers’ lives, banks are under ever more pressure to move with the times, move fast and keep moving.
Some banks acknowledge that the pace of innovation and high levels of specialisation require outsourcing expertise.
This is how a Stellenbosch-based technology incubator, FireID, whose homepage features a barefoot programmer in khaki shorts lying on a couch as he works on his laptop, is helping light the technology fire for one of the country’s oldest and largest financial institutions, Standard Bank.
"Companies like FireID have a very different culture and view of the world compared to a large corporate like Standard Bank," says John Campbell, chief operations officer of Standard Bank’s innovation department, Beyond Payments, which first worked with FireID on a payment product for Mxit in 2012.
"This allows for a fresh approach to the world — particularly the future world — and consumers, which allows us to be proactive in developing new products. We partner on the objectives and leave it to them to solve and improve while we focus on the financial and regulatory aspects."
...
FIREID was established as a software security company for the banking industry in 2011 by five people who met while studying subjects including computer science, journalism and philosophy at the University of Stellenbosch.
These days, the company comprises 32 people who work across several industries to help clients take advantage of new technology trends.
Among FireID’s products is the mobile payment application (app) SnapScan that was developed in partnership with Standard Bank to allow customers (from any of SA’s banks) make cashless and cardless payments using their phones.
The app, which celebrated its first birthday last week, is used by more than 100,000 consumers at about 18,000 merchants countrywide.
"There are hundreds of thousands of merchants without access to formal card-acquiring facilities or who can’t afford existing products," says co-founder and CEO of SnapScan, Kobus Ehlers. "In developing the app, we looked at ways in which technology could be used to expand access for these merchants.
"We knew it was key not only to design a cool piece of technology, but also to address a real-world problem. Then we asked the question: ’Wouldn’t it be cool if you could pay for your coffee using your phone … (and had) the added security of not having to hand your card over or carry cash around with you?’ That’s where the idea came from."
Mobile payment is not a new idea, he says; the technology has existed for years — even in SA. The difficult part was taking that technology and turning it into a product that makes sense in SA — and then getting the product on to the market.
"Low-cost mobile wallets, like M-Pesa, work spectacularly well in countries such as Kenya, but struggle to get a foothold here," says Ehlers.
"On the other hand, products like Square or Apple Pay do not yet operate here, possibly because of the different commercial or regulatory environment. Payments are intensely personal and need to be customised to fit a specific set of consumers."
In developing SnapScan, Ehlers and his colleagues saw that, while many consumers have smartphones (particularly those with cash to spend), a significant number of merchants use feature phones, which lack the advanced functionality of smartphones.
"That meant any solution that ‘plugs into’ a smartphone would have limited reach," he says. "In fact, we selected the most boring technology out there — that is, QR (Quick Response) codes — exactly because they are free, unless you count the cost of printing a piece of paper, and it requires no electricity or expensive point-of-sale system to work. This means that anyone can start accepting electronic payments."
Merchants can sign up for SnapScan within minutes and thereafter are charged a 3% transaction fee. Consumers use the app to scan the SnapCode displayed by the merchant and confirm the transaction with their PIN.
Their credit card is immediately debited and the merchant receives the funds instantly.
That SnapScan is accessible to other banks — the competition — is strategic to Standard Bank. "We ultimately serve people and people have pretty much the same requirements," says Campbell.
"Competitive advantage should be predicated on the quality of service delivery and not a piece of technology, because any technological advantage is short-lived. We plan to launch more products focused on servicing customers irrespective of their traditional banking relationship."
...
SNAPSCAN has also undertaken several unusual projects. The company works with Street Parking Solutions and the City of Cape Town so that motorists can use SnapScan to pay parking marshals who are equipped with SnapCodes attached to lanyards and who carry phones to confirm payments are successful.
Vendors of Cape Town’s Big Issue, a magazine published on behalf of and sold by disadvantaged people, are also able to accept electronic SnapScan payments following the same procedure. Those who do not have access to bank accounts are issued with cash vouchers, which can be redeemed at Standard Bank ATMs and participating stores.
The Standard Bank-FireID partnership is mutually beneficial, says Ehlers. "FireID and Standard Bank have had a long-standing relationship having worked together on other projects before SnapScan.
"It is a powerful relationship in that it plays to the strengths of both parties. FireID can bring rapid (and radical) innovation and a new focus on customer experiences, whereas Standard Bank brings decades of knowledge about banking and trust.
"We’ve seen the benefit of combining the infrastructure, consumer trust and influence of a big South African bank with the agility of a small, start-up team. It runs deeper than that, of course; there is a lot of technical expertise and experience within the bank that we’ve been able to benefit from."
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