As a new generation jostles for faster and easier means of payment, businesses need to capitalise on new market opportunities. We asked Sureswipe’s marketing executive Ondina Pires and M-Pos GM Alwyn Fourie to discuss the business of breaking into emerging markets.
IT’S ALL ABOUT TIMING
Businesses of every kind need constantly think of ways to expand, and what lies on the other side of their current product offering. It is an exciting time in the payments market with new and innovative technologies creating opportunities for businesses on every level to upscale.
The key to expanding well however, is the due diligence to make sure the product and timing are just right.
The fact is that many consumers simply don’t carry cash anymore, and in 2016, they shouldn’t have to. For instance, Kenya is virtually a cashless society with 86% of households using mobile payments and the number of mobile money users in Africa is estimated to reach 101 million users by the end of this year. However, in the South African market in particular, cash is still king for the micro merchant, especially in the informal sector.
This means is there is a surplus of cards and alternative payment forms in the market and not enough acceptance points for them. For businesses across the board this the opportune moment to cash in on the additional revenue stream created by closing the gap between cards and acceptance points. For many merchants the hesitance around card acceptance has been a misconception that it is more expensive than cash. The truth is that cards are estimated to have a five times faster growth rate than cash.
The key for point of sale providers such as ourselves, is to ensure that the cost model is sustainable and allows us to provide acceptance points at an affordable price for merchants. For retailers, the combination of an increasingly cashless society and more affordable mobile payment options is where the opportunity lies.
CATCH UP FAST
One of the main constraints when looking at making changes, is the cost associated with the decision. When tapping into a new market, there are often high costs associated with educating the market on the product and learning through trial and error.
When we decided to get involved in M-Pos, we instead chose to be a fast follower, and by learning from companies already in the market we didn't have to pay the school fees to educate both ourselves and the market on M-Pos. Learning from others also allowed us the necessary time to perfect our own product offering to be even more competitive than if we had begun before we were truly ready.
With more companies disrupting what used to be a very traditional payments industry, we can also see how cost to the merchant is decreasing while the quality of product offerings is increasing. This means merchants who make the switch from cash now are also able to avoid the cost of an untested product.
LOOK TO THE FUTURE
While the current market necessitates a move towards a cashless society, innovators such as ourselves are already looking for even better ways of facilitating that move - what is termed “next gen pos”. This is where you take the M-Pos payment technology and integrate into a tablet based or even a cell phone based point of sales solution. In a country such as South Africa where a large portion of the base already uses smart devices, the adoption, roll-out and use of this kind of technology will be far easier and cost effective than the tradition point of sales solution.
The next gen pos solution would enable both the smaller guy and the bigger enterprises to allow for integrated ‘pay at door’, ‘pay at table’ solutions. In a country such as South Africa where a large portion of the base already uses smart devices, the adoption, roll-out and use of this kind of technology will be far easier and cost effective than the tradition point of sales solution.
If we are to take the restaurant industry as an example, traditionally a waiter will come to the table with the bill, get out a card machine and then do the payment. They then have to go back and close the table and the actual transaction which is time consuming. With a next gen solution what would happen is that you would open the order and that amount would go straight to the actual device. You then process the payment and from the payment being authorised, it closes automatically on the point of sales solution. What this means is a large reduction in time and effort. It will also allow the actual merchant to reconcile a lot quicker. Those transactions are really instant. This has interesting applications in various other industries, ultimately to enhance customer experience and limit fraud.
The most important lesson when entering a new market? Find the meeting point between your business need and the market necessity.