South Africa\u2019s 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\u2019s clients securely.<\/p>\n
The bank said Absa Pay will be available for purchases made through online merchants and will remove the need to enter payment card details.<\/p>\n
Instead of entering their card details, customers can now select \u201cAbsa Pay\u201d with merchants using a payment provider that supports the technology.<\/p>\n
After selecting Absa Pay, buyers will be directed to a secure Absa portal.<\/p>\n
Customers must then approve the transaction in their Absa banking app for added security and fraud prevention.<\/p>\n
\u201cEarlier this year, Absa partnered with a payment aggregator and its merchant community, to conduct a pilot study and introduce the API to market,\u201d the bank said.<\/p>\n
\u201cThis successfully demonstrated Absa\u2019s ability to securely process and monitor transactions through the API.\u201d<\/p>\n
MyBroadband has learned that the payment aggregator in question is South African Ozow.<\/p>\n
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 \u201cpay-by-bank\u201d.<\/p>\n
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.<\/p>\n
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.<\/p>\n
\u201cThis is a milestone in our mission to provide innovative and inclusive financial solutions that meet the changing needs of our merchants,\u201d said Ozow technical operations head Coenie Louw.<\/p>\n
\u201cWe look forward to collaborating with Absa to promote the adoption of the Absa Pay and improve the digital payments landscape in South Africa.\u201d<\/p>\n
Absa said the launch of its API was a significant development in the right direction for its roughly 3 million digitally active customers.<\/p>\n
\u201cWe are incredibly proud to collaborate with leading payment fintech companies, using open banking technology to create a seamless and safe online banking experience,\u201d said Absa Everyday Banking chief digital officer Subash Sharma.<\/p>\n
\u201cThese collaborations are important to maintain a fully secure ecosystem for our customers and partners,\u201d Sharma continued.<\/p>\n
\u201cBut we advise customers to maintain vigilance and safeguard their digital banking \u2018keys to the safe\u2019 \u2014 a PIN and password should not be shared with third-party sites.\u201d<\/p>\n
Absa is the fourth bank to introduce an API and the third with an Open Banking Platform-compliant one.<\/p>\n
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.<\/p>\n
The first to introduce a \u201cprogrammable bank card\u201d in South Africa was a startup called Root<\/a>, developed in partnership with Standard Bank.<\/p>\n Root eventually switched off its programmable bank card<\/a> functionality to focus on its insurance API product.<\/p>\n However, its RootCode technology lives on in Investec\u2019s programmable bank accounts<\/a>.<\/p>\n Capitec launched its Open Banking API in March 2023, dubbing it Capitec Pay<\/a>.<\/p>\n