Rapid PayShap growth in South Africa

Banks are reporting rapid growth in the use of PayShap, the new transaction service launched on 13 March by BankservAfrica in collaboration with the South African Reserve Bank.

PayShap aims to provide an instant payment service that can replace physical cash. Customers can transact using their phone numbers.

Four banks have adopted PayShap for the first round, with more set to join in the future. Standard Bank, Nedbank, Absa, and FNB have facilitated PayShap on their banking platforms since March.

All four have reported encouraging uptake of the service, with usage in line with expectations.

Chipo Mushwana, executive of emerging innovation at Nedbank, said there had been 61,000 PayShap payments worth over R51 million between the cohort one banks in the first month.

Ravi Shunmugam, FNB Chief Executive Officer EFT Product House, said in the last week of March ShapID registrations grew by 43%.

“The payment rail is still in its infancy stages of adoption, but we are encouraged by the week-on-week growth in payment volumes and ShapID registration,” said Shunmugam.

Daily Investor asked the four cohort one banks questions about the uptake of PayShap in the first month. Here are their observations.

Nedbank

Mushwana said there had been rapid growth and uptake of PayShap in the first month of operation.

Nedbank expects sustained user growth over the next months as customers become more comfortable making PayShap payments.

Growth will be accelerated as more banks allow for PayShap payments. Nedbank also dropped PayShap transaction fees to R0 until the end of April to encourage uptake. After this, transaction fees will increase to R1.

The R3,000 transaction limit and limited participation and education are the biggest inhibitors to Payshap adoption, said Mushwana.

However, Nedbank have high hopes for PayShap.  “We envisage that, in the years to come, PayShap will be the preferred payment method for all South Africans,” she said.

Standard Bank

Rufaida Banoobhai, head of payments South Africa for Standard Bank, said that there had been great client excitement to use the service, and adoption has been steady and encouraging.

They are developing a growing base of clients who have registered Standard Bank as their proxy. Banoobhai said Standard Bank estimates that it holds about 30% of the proxies registered in the industry.

Adoption levels are in line with expectations. “As a new payment stream, which is very nascent, we are seeing increasing activity levels,” she said.

Standard Bank expects a strong increasing trend of uptake in the months to come spurred by the three new banks that will go live on PayShap in June.

FNB

Ravi Shunmugam, FNB CEO of EFT Product House, said that while PayShap is in its infancy, the bank has been encouraged by the week-on-week growth in payment volumes and ShapID registration.

“ShapID registrations have grown by 43% in the last week of March, showing that customers are steadily adopting the key value proposition of paying using a ShapID,” he said.

“We expect volumes to increase rapidly in the coming months as more customers register ShapIDs.”

FNB charges clients nothing for transactions under R100 which means these transactions replicate physical cash. 61% of payments under R100 were made to ShapIDs.

He said that over time FNB expects the use of PayShap to become dominant.

Absa

Charl Smedley, managing executive of payments at Absa Everyday Banking, said that Absa has been “encouraged by the significant interest and adoption from customers”.

Smedley said that customer uptake has been in line with the initial expectations that the bank had.

Absa has been running a communication drive to encourage PayShap use. Absa has used in-app pop-ups, SMS, in-app messaging, emails, and social media to highlight the benefits of PayShap.

Absa expects uptake to grow steadily over the next few months.

Smedley said Absa would continue to monitor the service for inhibitors, but customers will always have the option of using PayShap to make instant payments.