Digital payments have been the primary enabler of new financial services in Africa, as evidenced by the M-PESA-driven development of an entire financial ecosystem in Kenya. Further south, MTM MobileMoney has developed an electronic commerce payments system that enables debit payments, which should decrease seller discomfort with the credit-based digital commerce that has prevailed in that country.
The new service, called payD, enables any cell phone to be used as an encrypted point of sale terminal. Users register card details to their cell phone number, which is quoted to sellers. The consumer then receives an SMS message requesting their PIN. The seller doesn’t see the buyer’s debit card number and the message containing the PIN is removed from the phone once the transaction is complete-another person can’t use the phone to execute transactions without knowing the PIN.
The prepaid service expands online payments in South Africa beyond credit cards, which was a hindrance to the development of the electronic commerce market because of the inherent default risks and high transaction costs for sellers. As such, the range of products and services available online in South Africa has been limited.
The new service has already gained some traction, from 1time, a local budget airline. In a statement, Rodney James, the airline’s CEO, said he was attracted to the secure alternative to an electronic funds transfer or bank deposit payments.
