A new payment service called PayShap was launched this week, and it will give big South African banks access to powerful new data on how customers spend cash.
PayShap is intended to replace physical cash, enabling instant transactions between users that should clear within 10 seconds of the payment being made.
This means that the recipient can confirm payments in real-time such as with physical cash.
“Whether it’s a R50 note in your hand or your bank account, we want to start getting the same look and feel,” said Fundi Tshazibana, the deputy governor of the South African Reserve Bank (SARB).
She described PayShap as a cash equivalent but without the costs that come with holding physical cash.
“In rural setups specifically, things are very cash-driven,” she said.
PayShap will initially be limited to transactions capped at R3,000.
A data opportunity
If PayShap is widely adopted, it will provide banks with interesting data on how consumers spend cash, said Ravi Shunmugam, CEO of FNB EFT Product House.
Users of physical cash make one large withdrawal from their account and then many transactions, which are unknown to the bank.
Dayalan Govender, managing executive of solution innovation at Nedbank, said they estimate that 1,500 transactions are made per person per year in informal markets.
He estimated that 90% of those transactions are under R200 in value.
PayShap will give banks access to this transaction data if clients use the service similarly to cash. “Those data points for us are critical,” he said.
Seeing this data will allow Nedbank to deepen its relationship with its clients.
Nedbank is making the product free until the end of April, after which it will increase pricing to R1 per transaction.
Nedbank wants people to take up the use of the product and doesn’t want prohibitive pricing to stand in the way of this.
Establishing how to leverage the data accessible through PayShap transactions will be interesting, said Govender.
He also believes that the PayShap service will be adapted once there is data to indicate how users engage with the service.
Tshazibana echoed that point, saying that it will be important to monitor how people engage with the service in the real world and adapt the offering to suit them.