Tap-to-pay surge in South Africa

Standard Bank has reported a surge in contactless payments over the past year, which the bank said now make up the majority of its customers’ payments.

Contactless payments refer to secured transactions that employ devices fitted with near-field communication (NFC) or radio-frequency identification technology. This lets the customer pay without making physical contact with a card machine.

Typical contactless payment methods include tap-to-pay — using a bank card, smartphone, or smartwatch — or paying by scanning a quick response (QR) code.

Standard Bank noted that its most significant increase in the usage of contactless payments by clients was during 2023, which saw a 37% increase.

This year, usage has increased by 14%, which means 53% of all transactions processed by the bank have been contactless, compared to 42% two years ago.

“Consumers are becoming more accustomed to the tap functionality, and it’s becoming increasingly entrenched among merchants across various industries,” said Standard Bank’s head of credit, Tumelo Ramugondo.

Using contactless payments has not been a trend restricted to a specific income segment, according to Standard Bank.

All income brackets have taken to the increased convenience of contactless payments, specifically middle to high-income clients who have noted double-digit year-on-year increases in tap-to-pay transactions.

Standard Bank attributes the surge in contactless payments to the use of digital wallets like Apple Pay, Samsung Pay, Garmin Pay, and Google Pay, which have seen a 65% year-on-year increase.

Digital wallets enable banked customers to link their cards to an NFC-equipped smartphone or smartwatch and use them to make contactless on point-of-sale terminals instead of using their cards.

Digital wallet transactions now comprise 13% of all Standard Bank customers’ contactless payments.

“While Apple Pay remains the dominant digital wallet, we have seen increased adoption of our own digital card wallet, SBG Mobile with transaction volumes growing nearly threefold year-on-year,” said Ramugondo.

Digital wallet usage in South Africa

Multiple other banks have also noted significant increases in digital wallet usage in 2024.

Absa card issuing executive Tshipi Alexander said the bank’s digital wallet enrollments had increased by 20% in the past three months.

Year-on-year, digital wallet transactional values increased by 75%.

Capitec was a bit late to the digital wallet adoption party, beginning with the launch of Samsung Pay (renamed to Samsung Wallet) in July 2022.

Nonetheless, Capitec customers have embraced the payment method in the past year.

Capitec recorded an enormous 238% increase in digital wallet values and 225% in volumes between June 2023 and June 2024.

Like with Standard Bank customers, Apple Pay was Capitec’s most popular wallet — at least in terms of transaction values. It accounted for 77% of Capitec customers’ total digital wallet spending.

Nedbank solutions innovation executive Dayalan Govender confirmed the bank also had a significant increase in digital wallet transactions in 2024.

“This is a result of clients adopting and trusting mobile devices more as well as a spin-off of our digital transformation strategy which is focused on driving wider mobile adoption by our clients,” Nedbank said.

Govender said Apple Pay was also Nedbank customers’ most used digital wallet.