Payfast and Capitec Lead the Charge in Boosting South Africa's Open Banking Ecosystem

In an era when technological innovations are increasingly removing barriers and creating opportunities within the financial sector, two significant players in South Africa's payments industry, Payfast and Capitec Bank, are working diligently to transform the landscape of digital payments and foster financial inclusion. Payfast's latest "State of Pay" 2023 report sheds light on the necessity of more inclusive financial services, pointing out the 19 million underbanked South Africans waiting at the fringes of the digital economy.

In an effort to bridge this gap, Payfast, a prominent online payment processing service, has joined forces with Capitec Bank, one of the country's top retail banks, to popularize open banking – a progressive practice that allows for the sharing of financial and client data between banks and third-party providers, under the condition that consumers authorize the exchange. This partnership is centered around a national campaign promoting Capitec Pay, a pioneering open banking solution launched in February 2023, which equips consumers with the ability to execute safe and card-free online payments using just their cellphones, bank accounts, or ID numbers.

As highlighted by Brendon Williamson, Managing Director at Payfast, the integration of Capitec Pay not only offers customers who lack access to traditional card payments an avenue into the digital payment ecosystem, but it also further streamlines the online checkout process. This results in a reduction of friction at the point of sale which, according to Williamson, leads to fewer missed sales – benefiting both the consumer and the merchant.

The launch of Capitec Pay, signifying a significant advance in payment convenience and security, has already recorded substantial uptake with over four million unique users executing upwards of 13 million transactions monthly, and an impressive completion rate of 88%. Jerome Passmore, Head of Capitec Pay, elucidates that beyond minimizing failed payments and shopping cart abandonments, the solution heightens revenue for merchants and ensures an enhanced payment experience for clients, effectively keeping their sensitive banking details secure and private.

Testing the water with promotions, Payfast and Capitec incentivized usage of Capitec Pay during the last quarter of 2023 by offering cashback prizes to consumers and substantial cash prizes to merchants who embraced the new payment method. The positive feedback from participating merchants like Patrick Kitoko, who cites swift access to sales funds and integration simplicity as key benefits, underscores a confidence in the potential of open banking to transform their businesses.

By investing in the promotion and proliferation of Capitec Pay, Payfast and Capitec Bank are not merely introducing another payment option into the market; they are nurturing the growth of an ecosystem where financial services are democratized, and where both consumers and merchants can share in the advantages of a more transparent, efficient, and secure financial landscape.