Day: 26 September 2024

How Digital Payments Are Transforming South Africa high-angle-customer-paying-with-nfc-device

How Digital Payments Are Transforming South Africa

Staff Writer Posted on 1 week ago

The Cashless Revolution: How Digital Payments Are Transforming South Africa

In recent years, South Africa has witnessed a significant shift in how consumers pay for goods and services. The growing trend of contactless payments and digital wallets has paved the way for a cashless society, and banks like Standard Bank are at the forefront of this transformation. From supermarkets and fuel stations to restaurants and clothing retailers, consumers are increasingly choosing to tap their cards or use their mobile devices instead of traditional cash payments.

The Surge in Contactless Payments

According to data from Standard Bank, contactless payments now account for 53% of all transactions, marking a notable increase from 42% two years ago. This trend has been driven by several factors, including greater trust in digital payment methods, widespread adoption of contactless technology among merchants, and consumer convenience.

Shaun Jacobs, Head of Digital Payments at Standard Bank, highlights the significance of this shift, pointing out that contactless payments have seen the largest growth among both middle and high-income clients. Notably, 81% of certain client segments are using this payment method regularly, signaling a growing dependency on cashless solutions across all income brackets.

The bank also saw an impressive 37% increase in the value of contactless payments in 2023, with an additional 14% growth this year. Standard Bank’s head of credit, Tumelo Ramugondo, attributed this rise to the increased entrenchment of tap-to-pay functionality in merchants’ payment systems, as well as consumers’ growing comfort with these methods.

Digital Wallet Adoption and Beyond

The adoption of digital wallets has also seen explosive growth. While Apple Pay remains the most popular, Standard Bank has noted a threefold increase in the use of its own SBG Mobile wallet. Transactions through digital wallets now represent 13% of the bank’s total contactless payments, compared to just 4% two years ago.

Ramugondo also noted that while necessities like groceries and fuel continue to dominate spending categories, there is growing evidence of discretionary spending through tap-to-pay. Clothing and footwear retailers, for example, saw a 23% year-on-year increase in contactless payments.

Digital wallets are becoming more accessible and mainstream, with services such as Samsung Pay, Garmin Pay, and Google Pay gaining traction. This growth reflects a broader global trend toward the convenience and efficiency of contactless payments, but also speaks to a more localized push toward a cashless economy in South Africa.

A Broader Push Toward Cashless

The move away from cash is not just a consumer-driven phenomenon. The South African Reserve Bank and commercial banks have been actively pushing for a reduction in cash use. This effort is part of a broader strategy to enhance safety, transparency, and convenience, and to promote business opportunities, especially for women and informal traders.

Reserve Bank Deputy Governor Fundi Tshazibana emphasized that the reliance on cash, with around R160 billion to R180 billion in circulation, creates numerous problems. Cash-related crime, limited transaction capabilities, and the inability to track its economic impact are among the main concerns.

One key initiative from the Reserve Bank is the launch of PayShap, a payment service designed to integrate non-banking users into the formal payment system. This service aims to provide easier access to small payments for informal traders, an essential step in expanding financial inclusion across all sectors of the economy.

Overcoming Challenges

Despite the clear benefits of digital payments, there are challenges to overcome. A major concern is building consumer trust in these platforms. According to Tshazibana, trust plays a vital role in how consumers adopt and interact with digital payments. For South Africa to fully embrace a cashless economy, banks and regulators must address these trust issues, ensuring secure, reliable, and accessible payment systems.

Moreover, while the move to digital is promising, it is essential to strike a balance between innovation and inclusivity. The country’s socio-economic landscape means that many South Africans still operate outside the formal banking system. Therefore, as the cashless movement accelerates, it is crucial to ensure that all citizens can participate and benefit from this evolution.

South Africa is rapidly moving toward a cashless economy, with contactless payments and digital wallets playing a pivotal role in this transformation. As more consumers embrace the convenience and security of these methods, banks and the Reserve Bank are working to promote further adoption while addressing challenges related to trust and financial inclusion. The road ahead may have its hurdles, but the future of payments in South Africa is undoubtedly digital.

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Source: Daily Investor

Key Insights for Investors on Sectional Title Insurance House Insurance Document Form Concept

Key Insights for Investors on Sectional Title Insurance

Staff Writer Posted on 1 week ago

Navigating the Rise of Mixed-Use Properties: Key Insights for Investors on Sectional Title Insurance

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As urbanization rapidly transforms the face of many African cities, South Africa is at the forefront of mixed-use developments. These integrated spaces, which house residential, commercial, and sometimes even leisure units, are becoming a growing trend. They offer a blend of living, working, and entertainment opportunities in one location, catering to the increasing demand for convenience, connectivity, and modern urban lifestyles. However, with this evolution comes the need for more nuanced and comprehensive insurance policies to protect both investors and tenants alike.

Lindiwe Matlou, Head of Santam Real Estate, notes that urbanization in Africa is accelerating at a rate that will see about a quarter of the global population residing on the continent by 2050. For real estate investors, this is both an opportunity and a challenge, especially in navigating the complexities of sectional title insurance.

Mixed-use properties, like Cape Town’s iconic Harbour Arch development, which is poised to become the city’s first large-scale, inner-city mixed-use precinct, illustrate this growing trend. This development blends restaurants, offices, hotels, and apartments into a single complex, mirroring the global push toward creating “live-work-play” environments. For investors, such properties are lucrative, but they also come with the need for tailored insurance solutions.

The Role of Sectional Title Insurance

One key difference between sectional title properties and freehold homes is the responsibility for insurance. In freehold properties, the homeowner insures the entire building and its contents. In sectional title developments, the body corporate, which represents all owners in a complex, is responsible for insuring the building, common areas, and structures. This includes residential and commercial units, but excludes moveable contents within individual homes or businesses.

As Lindiwe Matlou explains, claims in sectional title developments are typically handled by the body corporate, covering damages like storm damage or geyser failures, which are the most common insurance claims in South Africa. With the increasing impact of climate change, claims related to natural disasters are expected to rise in the coming years. However, it’s essential for investors to understand that sectional title insurance covers only the structure and not the personal contents within the units.

Key Insurance Considerations for Investors

Property investors must be aware of several important aspects when dealing with sectional title insurance. First, unit owners cannot claim directly from the insurer; any claims must go through the body corporate. Additionally, owners are responsible for paying any excess required during the claims process, in line with the Sectional Title Act.

Investors should also ensure that the building’s insured value is regularly reviewed. The trustees or body corporate should confirm that the building is neither under-insured nor over-insured, ensuring the right balance for both the owners and potential future claims.

Lindiwe Matlou emphasizes the importance of selecting the right insurer. “Investors need an insurer with a strong track record and deep understanding of the regulatory environment,” she says. It’s vital to consider additional coverage for public liability, trustee liability, and specific items like geyser repairs. A robust insurer will also offer specialized solutions for unique risks and provide support through risk specialists who can offer sound financial and technical advice.

The Future: Smart Cities and Cybersecurity

With the rise of “smart cities” and interconnected living spaces, technology will play an increasingly significant role in real estate insurance. The Internet of Things (IoT) is reshaping how people live, with smart homes becoming more prevalent. This evolution is pushing insurers to adapt policies that address emerging risks, including cybersecurity threats. By 2050, over 50 billion connected devices are expected globally, and cybercriminals are likely to target vulnerable properties.

Matlou adds that Santam has already started integrating technology into its offerings, such as smart geysers that detect and manage potential problems before they worsen. As buildings and homes become more digitally connected, having cyber cover as part of sectional title insurance is crucial. Santam offers cyber coverage of up to R1 million, ensuring that properties are protected against the ever-evolving digital threats.

As mixed-use developments continue to rise across South Africa and other parts of the continent, property investors must be equipped with the right knowledge and tools to navigate the intricacies of sectional title insurance. Whether it’s understanding claim procedures, selecting the right insurer, or preparing for the future of smart cities, the evolving landscape presents both challenges and opportunities. By staying ahead of these trends, investors can ensure financial protection and peace of mind for themselves and other stakeholders involved.

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Source: IOL News