Zapper and FlickPay, mobile payment applications for smartphones developed in South Africa, recently announced their entry into the local market.
They will compete against SnapScan, which was officially launched by Standard Bank in May 2014 after a year-long beta period, and, to a lesser extent, Gust Pay.
All four apps were developed in Cape Town, with SnapScan and Gust Pay based in Stellenbosch.
Although 3 of the 4 apps are built around the concept of using a quick response (QR) code to initiate a payment, none of them use exactly the same approach.
The table below summarises some of the key differences between the four applications:
|Requires POS||Yes||Yes (and Wi-Fi)||No||No|
|QR Code||Dynamic – identifies buyer||None||Static – identifies merchant||Dynamic – identifies merchant (and transaction info)|
|BlackBerry 7 support||No||No||Yes||No|
|BlackBerry 10 support||No||No||No||No|
|Windows Phone 8+ support||No||No||No||Yes|
|Merchants||Vida e Caffe franchise, a few other CT-based businesses||0||“Over 11,000”||100 + 150 (soon)|
Update: Gust Pay has said that it has stopped its retail activities and are only doing cashless payments for music and sports events at the moment. They will also not be operating in South Africa for the near future, focusing instead on the UK and European markets.
The three QR-code based apps all require you to link a card capable of making online payments. Though only some support cheque cards, all of them support credit cards.
Gust Pay offers a mobile wallet system, and lets users top up using either EFT or their credit card. Instead of using a QR code to begin a transaction, customers and merchants discover one another over a local Wi-Fi network.
SnapScan issues its merchants with a QR Code, which can be printed on a simple cardboard stand. Users then scan this code to begin a transaction. It is up to the user to enter the amount they wish to pay.
Zapper also uses a merchant-side QR code, but theirs can contain details of the transaction. It also seems to be specially geared for restaurants, as they say it lets users split the bill from the app.
FlickPay has the user generate the QR code, which the merchant then reads from their point-of sale (POS) machine.
Each system has benefits and drawbacks, but FlickPay’s buyer-identifying QR code that lets a merchant charge your credit card immediately raises security questions.
Queried about this, FlickPay MD Trent McLelland said that it is something they have thought through.
“Our QR code is essentially like a one-time-PIN with a bank,” McLelland said. “It will expire within a short period of time.”
The humble credit card isn’t going anywhere just yet
While the four apps will be competing against one another for market penetration, they will also compete against conventional card payments that are mobile-enabled.
Absa’s Payment Pebble and Nedbank’s Pocket POS let merchants use a smartphone as a credit card machine by attaching accessories — either wirelessly or through the headset jack — to accept chip & PIN cards.
As one might expect, to use Nedbank’s Pocket POS you will need a Nedbank bank account. The Payment Pebble can be linked to any bank account, but you will have to register as an Absa merchant to receive the device. Absa’s website also says that Pebble users that elect to settle into an Absa account will receive preferential rates.
However, another new entrant to the South African market, iKhokha, has also launched a device and service that treats all merchants the same, regardless of bank account.
Their device, dubbed the iKhokha Edge, is set to cost R989 once-off, with merchants being charged a 2.75% fee per transaction. It’s also available on a 24-month contract option.
FlickPay, Gust Pay, SnapScan, and Zapper all say they are open to sole proprietors and limited companies alike, with the transaction fee negotiable from merchant to merchant (usually depending on sale volumes).
The Royal Rumble
In the press release announcing Zapper’s launch in South Africa, the company boasted that it already had operations in the United Kingdom, Australia, France, Spain, Belgium, the Netherlands, and Sweden; and will soon be available in Germany.
Asked whether they had any regrets about leaving the South African market open for SnapScan to enter almost unopposed in 2013, Zapper SA boss Derek Wiggill said they had no regrets whatsoever.
“We are delighted that SnapScan is in the market and educating consumers around the benefits of mobile payment,” Wiggill said. “Whilst there are some advantages to being the first mover in a market, that status comes with its own set of challenges, we have observed competitors models, and believe we bring significant value beyond theirs.”
SnapScan co-founder Kobus Ehlers said they aren’t too concerned about Zapper and FlickPay eating their lunch.
“Competition is healthy and in the end customers and merchants will show where the most value is being created,” Ehlers said. “This is also validation of a real market demand for these products.”
Ehlers boasted they are delighted to have been able to create a vibrant mobile payments market over the past year.
Asked how SnapScan will respond to FlickPay and Zapper targeting restaurant chains and the like, Ehlers said they want to focus on places where mobile payments add real value, rather than just competing with card machines.
“We offer a wide range of POS integrations and many of our larger merchants use this integrated product,” Ehlers said. “We do, however, believe that mobile payments are about more than just large chain stores.”
Ehlers said that SnapScan has enabled thousands of merchants at weekend markets to accept credit card payments where previously cash was the only option.
“We recently provided mobile acquiring to all merchants at the Grahamstown and Innibos Festivals — both of which were a great success,” he added.
SnapScan has also seen merchants accepting payments from posters or donations from advertising on lamp posts.
“These new channels hold the real magic of mobile payments,” Ehlers said.
Interoperability, or death?
With so many mobile payment apps on the market, does this mean South African smartphone users will have to maintain accounts with each of them, or will there eventually be interoperability between them?
FlickPay’s McLelland reckons competition is good for both merchants and consumers.
Merchants can decide whether they want to accept one or more payment apps, and consumers can decide which app they want to download based on which one best fits their needs and buying habits, he added.
He also couldn’t resist taking a dig a SnapScan: “Fortunately, Flickpay is integrated into the POS so there is no need for QR code boards to clutter their counters.”
Zapper’s Derek Wiggill is not optimistic about interoperability and instead predicts
a bloodbath consolidation.
“Ultimately it will boil down to market share,” Wiggill said. “Consumers will retain and use the app that is in places where they transact, the market will consolidate fast and shake out players who are unable to attract significant coverage.”