Absa Pay launched

South Africa’s third-largest bank by tier 1 capital has launched Absa Pay, an open banking application programming interface (API) allowing fintech companies to transact with the bank’s clients securely.

The bank said Absa Pay will be available for purchases made through online merchants and will remove the need to enter payment card details.

Instead of entering their card details, customers can now select “Absa Pay” with merchants using a payment provider that supports the technology.

After selecting Absa Pay, buyers will be directed to a secure Absa portal.

Customers must then approve the transaction in their Absa banking app for added security and fraud prevention.

“Earlier this year, Absa partnered with a payment aggregator and its merchant community, to conduct a pilot study and introduce the API to market,” the bank said.

“This successfully demonstrated Absa’s ability to securely process and monitor transactions through the API.”

MyBroadband has learned that the payment aggregator in question is South African Ozow.

Originally founded as i-Pay in 2014 by Thomas Pays, Mitchan Adams, and Lyle Eckstein, Ozow has become a familiar option on e-commerce sites offering instant EFT payments, now called “pay-by-bank”.

The company hit R10 billion in transactions processed in March 2020 and continued to grow and scale rapidly despite initially facing headwinds from local banks.

In November 2021, Ozow raised $48 million (then R748.8 million) in a Series B funding round led by Tencent, which included Endeavour Catalyst and Endeavour Harvest Fund.

“This is a milestone in our mission to provide innovative and inclusive financial solutions that meet the changing needs of our merchants,” said Ozow technical operations head Coenie Louw.

“We look forward to collaborating with Absa to promote the adoption of the Absa Pay and improve the digital payments landscape in South Africa.”

Absa said the launch of its API was a significant development in the right direction for its roughly 3 million digitally active customers.

“We are incredibly proud to collaborate with leading payment fintech companies, using open banking technology to create a seamless and safe online banking experience,” said Absa Everyday Banking chief digital officer Subash Sharma.

“These collaborations are important to maintain a fully secure ecosystem for our customers and partners,” Sharma continued.

“But we advise customers to maintain vigilance and safeguard their digital banking ‘keys to the safe’ — a PIN and password should not be shared with third-party sites.”

Absa is the fourth bank to introduce an API and the third with an Open Banking Platform-compliant one.

According to Ozow, open banking allows third-party developers to create apps and services around financial institutions, offering safer and more user-friendly payment options.

The first to introduce a “programmable bank card” in South Africa was a startup called Root, developed in partnership with Standard Bank.

Root eventually switched off its programmable bank card functionality to focus on its insurance API product.

However, its RootCode technology lives on in Investec’s programmable bank accounts.

Capitec launched its Open Banking API in March 2023, dubbing it Capitec Pay.

Nedbank followed with its Direct EFT service in March of this year.