MTN Mobile Money launches payD

MTN Mobile Money today (28 July 2011) announced the launch of payD, an e-commerce payment mechanism that will allow South Africans to buy online using their PIN-based bankcards.

The system will function based on an encrypted channel which operates through MTN’s Wireless Internet Gateway (WIG). This will allow debit card holders to make online transactions via an interface which allows them to securely entire their card pin number.

MTN Mobile Money has already partnered with eighty local merchants and complies with Visa and Mastercard security protocols. According to Dave Parratt, head of new business developments at MTN Mobile Money, PayD will also facilitate airtime purchases within coming weeks.

At present, payD is available on the MTN and Vodacom networks, although plans are being put into place to support other operators such as Cell C, 8ta and Virgin Mobile.

1time is among the first to integrate payD into its offering. Rodney James, CEO of the airline, said, “payD will make paying for 1time flights even easier. Although we have a wide customer base, not everyone has a credit card with which to purchase their tickets online. We have been looking for secure and convenient alternatives to the cumbersome EFT or bank deposit payment option for too long. payD fits the bill perfectly. As more banks become operational on the system, our ability to serve customers in the way they prefer will grow.”

World Wide Worx’s Online Retail in SA 2011 report shows that retail e-commerce hit R2 billion last year. “This sounds big,” said Parratt, “But it’s just 0.36% of our country’s total revenue sales. Why is it so incredibly low? The answer lies with both the consumer and the merchant. On the consumer side, only 3% of our population has credit cards, and this is generally the only way to transact online. On the merchant side, transaction costs for credit cards cut deep into margins and this reduces the range of products that e-tailers are able to offer online.”

payD increases the potential universe of consumers from 3% of South Africans to the 60% who have debit cards, and it drops the transactions fees by at least a third.

Currently, Standard Bank and Nedbank PIN-based debit card holders on the MTN and Vodacom networks can use payD. Other banking operators are due to begin oferring the service within a year said Parratt.  “As a payment mechanism, payD is completely partner neutral. Standard Bank and Nedbank are the first banks operational on the system but will soon be joined by other major institutions.”

payD uses the Authenticated Mobile Transaction (AMT) technology developed by MTN Mobile Money, which uses SIM and PIN technology to transform any mobile phone into a secure, encrypted point-of-sale terminal.

“A critical element to payD’s security, apart from the high levels of hardware-based encryption, is that the service will only work for the registered user via their personal mobile phone. So there need to be three elements simultaneously in place for the service to work: the debit card, the registered phone and the ATM PIN,” said Parratt. “It is as secure as walking into your nearest shopping centre, but it works online.”