While all the research indicates that online commerce is set to grow in South Africa, the speed and extent of that growth will be dependent on several factors, with payment as one of the most crucial.
Getting online payments right will play a role both in encouraging existing online shoppers to buy more, and to tempt offline shoppers online.
A key characteristic of online commerce in South Africa—and in Africa more generally—is the centrality of mobile commerce.
Research by the online fashion retailer, Spree, in 2017 indicated that the number of respondents preferring to use a mobile phone to shop had increased by 167 percent over the 2015 figure. Apps will thus power online shopping going forward, making the penetration of smartphones a critical consideration for online retailers.
Winning online payment solutions will therefore have to include mobile.
As regards payment, research from Effective Measure shows that there is overwhelming preference for either credit cards (45 percent) or debit cards (21 percent), with bank transfer the next-biggest category (20 percent).
The Effective Measure survey confirms the important of payment to online commerce. It finds that the biggest barriers to shopping online include a trusted payment solution and a better experience on the website. For online shoppers a trusted payment method was identified as a desirable improvement by 14 percent of respondents. For offline shoppers, a lack of trust in online payments was the top deterrent to shopping online (20 percent).
A huge contributory factor to this continuing distrust of online payments is, of course, the well-publicised surge in cybercrime. Better ways of authenticating shoppers are thus indicated but with one important caveat: greater security must not make the process any less user-friendly. In fact, greater user-friendliness should be the goal: all the indications are that user experience is critical in encouraging shoppers to complete online transactions, and certainly in increasing the propensity for repeat shopping.
Biometric authentication is definitely emerging as the most effective and convenient method of authenticating users. So far in the region we have seen businesses adopt a single authentication method to secure payment. However, times are changing and online retailers must adapt to every individual’s unique set of needs in order to maintain a positive customer experience.
Flexibility as regards authentication also supports strong data protection of customer information. Global experience suggests that online retailers should adopt a multi-layered security approach as a part of the authentication strategy, which protects data at every level in case criminals manage to get past the initial perimeter wall. Consumers entrust personal information to online retailers and they must be reassured that their data is safe—once trust is broken it is very difficult to win it back.
Such a multi-layered security approach would include not only a mobile one-time-password but also biometric authentication through facial, fingerprint or voice recognition, so customers can select the authentication method most suited to their needs and way of life. Maintaining a seamless experience within the mobile ecosystem must be a priority for online retailers to diminish fraud while preserving the consumer’s online shopping experience.
Bearing in mind the increasing use of mobile devices for online shopping, it appears payment solutions using mobile devices should be prioritised. For example, the Gemalto Mobile Secure Messenger effectively transforms any smartphone into a universal key to secure access to all banking channels and digital services.
All indications are that South Africa’s e-commerce market is set for strong growth. But the big winners will be those online retailers who create payment solutions that inspire confidence but that also enhance the customer experience.
By Moath Ismail, VP Digital Banking for CISMEA, Gemalto