How SnapScan and Zapper are surviving South Africa’s tap-to-pay onslaught
Scan-to-pay apps like Zapper and Standard Bank’s SnapScan maintain they will continue to play an important role despite the dramatic rise in contactless payments in South Africa.
Several banks report that tap-to-pay purchases on NFC-enabled card machines have surged dramatically over the past two years.
They say these were buoyed by Covid-19 pandemic hygiene guidelines that encouraged limited physical contact when going to stores.
Further advancing tap-to-pay popularity is the local expansion of digital wallets and wearable device contactless payments like Apple Pay, Samsung Pay, Fitbit Pay, Garmin Pay, and most recently, Google Pay.
These platforms allow customers to link a card to their smartphone, smartwatch, or fitness band and pay by tapping their device — after authenticating using a fingerprint, facial recognition, or password.
A MyBroadband reader recently noticed several restaurants in Centurion had stopped accepting QR-based payments through Zapper or SnapScan.
This raised the question of whether these apps still had any meaningful benefits to offer over tap payments.
Major restaurant groups like Famous Brands and Spur Corp. could not assist with our queries, as they allowed individual franchisees to decide which payment methods they accept.
However, Zapper and SnapScan themselves provided detailed feedback to our questions. Below is what they had to say.
SnapScan
Standard Bank acknowledged the convenience of SnapScan purely as a mobile payment application had decreased slightly because contactless payment users tended to overlap tightly with SnapScan app users.
“Merchant acquisition is where we can see some indirect impact,” Standard Bank said.
“While the SnapScan merchant base is still growing, it is better suited to businesses who are looking to improve their customer experience above the standard options available via card machines.”
Despite the rise of tap-to-pay, SnapScan said it had seen incredibly healthy and consistent consumer app growth thanks to a loyal user base and additional in-app features with standalone value propositions.
“We are continuing to build out standalone value propositions such as peer-to-peer wallet functionality, in-app ID verification and withdrawal of wallet funds to a bank account, in-app electricity and bill payment, scan and pay on parking tickets, and other hyper-convenience features.”
On the business front, SnapScan is also building out additional payment acceptance and integrated ecommerce solutions for a very specific online need and queuing up several value-adding financial and non-financial products to embed in the merchant experience and offering.
“Some of the soon-to-be-released features include human resources and payroll capabilities for small businesses, and a variable small business lending product with Standard Bank,” the bank stated.
Snapscan QR Code at Paul’s Homemade Ice Cream in Parkhurst
But aside from adding new products to respond to the changing market, Standard Bank argued that there were specific circumstances under which QR-based payments were preferable even when tap payments were available.
“At restaurants, tap-to-pay requires a staff member to process each payment via a tap-enabled card terminal, which needs to be brought to the table,” the bank explained.
“During a rush period, devices are in short supply, and for large tables, multiple payments can tie a waiter down, leading to an increased waiting time for the customer.”
But if a table or bill has a SnapScan code, every patron can scan and pay their contribution, allowing for processing without staff intervention.
This benefit extends to busy food vendors at markets, who often scramble to prepare orders.
“Tap-to-pay still requires the vendor to fuss with the card machine in order to process the payment,” Standard Bank stated.
SnapScan also works when customers and businesses aren’t in the same location, which tap payments logically cannot offer.
“Customers can pay by scanning a SnapCode placed on a business’s invoice or website, or pay remotely via a SnapLink that’s been sent to them via email, WhatsApp or social media,” the bank said.
Standard Bank added that SnapScan was also a safe and easy alternative to using cash when paying for deliveries.
This also avoids the increased overheads and operational costs of maintaining multiple card machines for a fleet of delivery drivers.
Zapper
Zapper CEO Brett White acknowledged the benefit and convenience NFC offered over QR code scanning but said merchants would be “foolhardy” to ignore the value offered by scan-to-pay services.
“There are use cases that QR can address that NFC simply can’t, and there are additional value-added services that can be coupled with QR such as customer insights, loyalty and vouchering that NFC can’t offer,” White said.
Firstly, the barriers to entry for scan-to-pay were almost nil — with merchants only requiring a bank account and printed QR code.
To accept tap payments, merchants must buy an NFC-enabled point of sale card reader, which White said put the method out of reach of emerging retailers.
For reference, one of the cheapest card terminals on the market is the Yoco Go, which retails for R699.
Zapper has launched tap-on-phone capability built into its apps, but phones supporting this require NFC and cost at least a few thousand rands.
Tap-on-phone essentially converts a smartphone into a contactless payment machine
On the customer side, White also pointed out that NFC was not available on many budget smartphones, which leaves people with these devices with the option of using physical cards or scan-to-pay.
“QR technology, meanwhile, has been widely incorporated into even the lower-end phones,” White said. Essentially any smartphone with a camera can use it.
Another advantage is that QR payments can be made while a terminal is offline or has no network connection, White said.
A big plus for QR codes is the ability to add loyalty programmes, vouchering, and alternative payment methods as part of the payment solution.
“By implementing a digital loyalty programme, such as the one we offer, offline merchants can also gain many of these insights generated from the anonymised customer data.”
“More than just generating increased and repeat sales, merchants are able to gain incredibly valuable customer insight through transactional data.
“This means they can design tailored campaigns to encourage repeat business and customer retention,” White said.
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