No fraud on Instant EFT since launch in 2014 – Ozow
Payments processor Ozow has responded to the recent warning against using Instant EFT to pay for goods and services.
The warning came from the South African Reserve Bank (SARB) and the Financial Sector Conduct Authority (FSCA), in consultation with the Payments Association of South Africa (PASA).
South Africa’s financial regulators raised concerns about the safety of Instant EFT as it relies on providing your online banking credentials to a third party.
They said that these third-party providers, like Ozow, employ screen scraping to perform an EFT on your behalf and validate that the payment has gone through.
Several ecommerce stores in South Africa offer Instant EFT as an alternative to card-based payments.
However, Ozow CEO Thomas Pays has said that Instant EFT is no less secure than any other payment method.
It also bolsters financial and digital inclusion in South Africa by enabling people who do not have credit or debit cards to shop online, he said.
“Focusing on obscure risks that are pervasive to the whole system seems centred on fear-mongering to protect historic revenue at the expense of the consumer value add,” Pays said in a statement.
“Just this week, in their long-awaited Consultation paper on open-banking activities, SARB itself concluded that the information currently available indicates that the screen-scraping practice poses no significant risk to financial stability at this stage,” Pays argued.
Pays hailed PASA, the SARB, and the FSCA as “strong protectors” of the South African financial system, stating that the regulators have fostered systemic stability, consumer rights, and one of the best payments systems in the world.
However, he also questioned the motives behind the media statement issued on Thursday that warned against the use of Instant EFT.
Pays said that it raises questions around whether the legacy banking players are more focused on their income streams, or their customers.
“For millions of South Africans, financial and digital inclusion can start with something as simple as being able to transact online without a credit or debit card,” stated Pays.
“The explosive growth of instant EFT as a payment method bears this out: previously ignored by the mainstream banks, an average of 20% of all e-commerce payments rely on this easy, fast and trusted means of payment.”
He said that Ozow has processed billions in transactions since it was founded in 2014, with not a single incident of fraud.
In contrast, the SA Banking Risk Information Centre’s annual crime report for 2019 showed total gross fraud losses for South African issued cards increasing by 20.5% between 2018 and 2019 — from R890.3 million to R1.07 billion.
Credit card fraud increased by16.2% between 2018 and 2019 — from R186.8 million to R217.2 million, Pays said.
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