South Africa: a hidden gem

South Africa is no doubt a troubled country with a turbulent history, and a worrying future. But let’s not get into politics here. Local payments and the fintech landscape are what I am always interested in.

It was my first time in South Africa this summer of 2021, and I came prepared. I was so scared of a potential scam and robbery that I have brought fake money in a physical wallet, a debit card separate from my main account with a very limited amount for daily use, and cash in local money withdrawn from the ATM in the airport that would be okay to lose. 

I have to say — locals that I met actually endorsed my preparations, they did not laugh at me. The stories I’ve heard from them about crime problems were truly blood-freezing. However, my own experience with money there turned out to be smoother than I had in many western countries.

Cards are universally accepted with ApplePay and GooglePay enabled virtually everywhere. Cash was still very useful for tips in the restaurants or the parking, but you actually could live without it, as a tourist. 

Despite being an African country, South Africa is not big on mobile wallets or QR-code payments, like the majority of the continent. That is due to a strong banking system that was set up by the British and evolved similarly to the way things work in the UK, Australia, New Zealand, etc.

For instance, one of my local friends described her payments behavior this way. ‘I do not own a credit card, only a debit card which I use everywhere, online and offline. However, when it comes to bill payments, electricity, and water, or shopping for a really large sum, I use ETF (bank account to a bank account transfer). To receive money from other countries I often use PayPal or Wise.’ Sounds like an average person from any western country.

However, the South African fintech industry has very interesting developments that go beyond. Just like in every other country on Earth, South Africa is a proud member of the digital banking revolution. Tyme, the digital-first bank that has started to stir things around, has a lot of resemblance to the Russian Tinkoff bank or Brazilian NuBank. It quickly climbed the competition ladder, outplaying both types of traditional banks that served populations with different income levels like Capitec (for lower income) and FNB, Absa (for higher income). 

(BrandsEye South African Banking Sentiment Index, 2021)

What’s different about Tyme is 2 things. 

1 — who runs it — a Singapore Tyme Group company that focuses on building digital banks in the emerging markets from Indonesia to New Zealand to South Africa. South Africa became their flagship country, but it is not the only one. I see this as a beautiful and unique example of how a group of talented people with enough investment can copy paste a good business model to different countries and get similar results. More local startups like Bank Zero later followed the success boosting the competition.

(Image from tyme.com)

2 — online/offline merge in onboarding. While the onboarding to pure digital banks is done via couriers or remote identification through the app, in South Africa it is done via physical kiosks at the retail stores. With the help of an assistant and kick-ass biometry. That is very cool and solves so many problems. Instead of having people to come over to bank offices, or having to meet with couriers, the bank came to where people always go — shopping for food.

I know this is nerdy and very specific to my daily job, but I could not be more excited seeing an ATM-like machine that will read your fingerprints, check your governmental ID, sell you a SIM card, print your name on a debit card, and give it to you. All done within 10 minutes. What a beautiful way to seamlessly include people in the digital economy without demanding the skills they might not yet have.

More than that, this year South Africa joined the world’s fintech map on BNPL (buy now pay later) that blew up among the economical turmoil and unemployment rates skyrocketing. 

That being said, I came back from South Africa certain that the future of embedded all digital finance that we envision is coming up soon in every place on Earth. Yet the way we all get there when it comes to details, is going to be very different from country to country.

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What the Money is a lifestyle channel about fintech, e-commerce, business and innovations by Anna Kuzmina, CBDO at 131. From Russia. With love.Follow Anna on Medium, Telegram или на VC.ru.