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Confidence Rebounds in SA as Consumers Embrace eCommerce & Contactless Payments

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Luis Monzon
Luis Monzon
Journalist. Reach me at Luis@ITNewsAfrica.com

 More than 18 months since the onset of COVID-19, Visa today announced the results of a study that tracks the impact of the pandemic on consumer attitudes and spending across Central and Eastern Europe, the Middle East and Africa (CEMEA).

The COVID-19 CEMEA Impact Tracker reveals the impact of COVID-19 on areas including consumer attitudes towards local merchant categories, travel, and events; cash versus digital payments; online shopping (both during and estimated post-COVID); and views on Buy Now, Pay Later and cryptocurrencies.

The findings highlight significant changes in attitudes to eCommerce following the impact of COVID-19, with 67% of those surveyed in South Africa reporting an increase in their online spending and say they will continue to shop online once the crisis ends.

Digital payments remain the preferred method for transactions, with continued to be a strong use of contactless solutions, including cards, digital wallets, and mobile payments.

The urgency in controlling savings and budgeting has somewhat waned compared to the onset of the pandemic – while consumers in [insert market] remain cautious, those surveyed have largely resumed shopping, dining, entertainment, and travel, albeit with hygiene precautions in place.

“Our research shows how the COVID-19 pandemic has transformed the way the region’s consumers spend their money, with many of these significant behavioral changes likely to continue after the pandemic is over. As online shopping and contactless payments become the ‘new normal’, it is more important than ever that businesses adapt to the changing consumer demand for a digital experience, which is increasingly seen as a safer and more seamless alternative to cash,” says Aldo Laubscher, South Africa Country Manager at Visa.

In South Africa, where vaccination rates among the general population lag behind the global average, consumers are somewhat indecisive about the country’s economic recovery, and feel ambivalent towards income, spend and savings.

Evolving Consumer Behaviors

The results show that consumers are gaining confidence in their shopping behaviors, with a significant improvement in consumer shopping habits for essentials, such as groceries, and a visible shift in attitudes towards wanting an ‘optimized’ experience, as well as being conscious about hygiene and avoiding contact. Customers have increasingly turned to online shopping channels for both essential and non-essential purchases – with a noticeable shift towards eCommerce and away from traditional face-to-face transactions.

In South Africa, 42% of consumers now say they shop for groceries online. These attitudes also prevail for luxury retail and fashion, with a substantial number of consumers choosing digital shopping channels and home delivery for convenience, safety, and a more seamless overall shopping experience.

Consumers’ behavioral changes that took place during the pandemic seem likely to continue once the crisis is over. South African customers also revealed that they will continue to shop online for both essentials and non-essentials.

In the essential categories, more consumers are resuming their pre-covid behaviours. Although some consumers are also comfortable buying non-essential items online, they have also resumed activities such as going to cafes, restaurants, and shopping at fashion & luxury stores, though less often than the pre-crisis level.

Overall, VISA’s survey found that the COVID-19 pandemic has created significant opportunities for the eCommerce channel, especially those retailers entering the digital economy for the first time, and those consumers who made their very first online purchases.

While COVID-19 severely impacted consumers’ overall travel expenditure, the sector is beginning to rebound, with a likely boost for local destinations over the coming months. In South Africa, majority of consumers said they prefer short-haul trips over long-distance destinations, while others said that local tourism and ‘staycations’ take preference over international travel.

Managing Consumer Finances

The pandemic has seen CEMEA consumers change the way they manage their finances, with an increased usage of credit terms and instalments. Some of the surveyed consumers said they would still continue to borrow from friends or family or use bank loans, while others indicated that they would instead use deferred payments through credit card instalments.

While consumers remain cautious about their spending and saving, consumers are slowly returning to their pre-pandemic habits, and the increase in saving and budgeting that was witnessed at the start of the pandemic had declined, with some consumers reporting closely watching their saving and budgeting by August 2021.

Changing Payment Preferences

Throughout the COVID-19 pandemic, South African consumers have continued to prefer digital payments to cash transactions, including contactless cards, mobile payments, digital wallets and P2P (peer to peer) transactions.

By the fourth wave of Visa’s survey in August 2021, 43% of consumers indicated that they preferred to pay using cash or cash on delivery, compared to paying credit cards, debit cards, and pre-paid cards. Consumers are increasingly aware of ‘Buy Now, Pay Later’ payment services, with a relatively high proportion, of those surveyed indicating their willingness to use these services, revealing an opportunity that can be harnessed by brands. This awareness has been driven by digital media, particularly social media channels, search engines and online advertising.

Supporting Local Businesses

At the outbreak of the COVID-19 pandemic, CEMEA consumers showed support and solidarity for local small and medium enterprises (SMEs), preferring to shop at neighborhood stores and supporting local businesses.

More than a year on, Visa’s research reveals that this support continues, though the urgency and intensity of support has waned slightly, as the severity of crisis begins to lessen. Consumers surveyed in August 2021 indicated that they believe it is still important to support SMEs. In South Africa, where post-COVID recovery is still relatively slow more than a year since the onset of the pandemic, more than half of those surveyed indicated that supporting local SMEs remains a priority.

Understanding Cryptocurrencies

Visa’s research indicated a noticeable increase in consumer knowledge of cryptocurrencies. However, there is less confidence in cryptocurrencies as a viable alternative to cash – with most respondents believing that they will be used for business-to-business purposes or for investments.

Carried out in four waves between 2020 and 2021, the research sought to understand the ways in which the region’s consumers have adapted to the evolving payments landscape while the pandemic is ongoing, as well as how their overall behaviors have changed, including their attitudes to spending and saving, payment options and level of spending.

Targeting the banked population, consumers in South Africa were asked about their spending habits and attitudes towards a selection of essential and non-essential activities, including grocery shopping, public transport, travel, luxury, and dining.

Edited by Luis Monzon
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