Card payments for SA’s spaza shops

5 September 2013

MasterCard has partnered with local company Blue Label Telecoms in a drive to equip 22 000 small traders and rural shops in South Africa with point of sale (POS) devices, enabling them to accept card payments for the first time.

Blue Label currently provides thousands of POS terminals in South Africa, which are used predominantly to sell prepaid vouchers such as airtime and electricity. Servicing millions of customers in rural areas and under-served settlements, these traders have historically operated on a cash-only basis.

“Over and above the estimated 100 000 spaza shops [small-scale, home-based grocery stores] spread across South Africa, there are tens of thousands of small- and medium-sized retailers and service providers,” Blue Label joint CEO Mark Levy said in a statement on Tuesday.

“Through our partnership with MasterCard, we will introduce many of these businesses to the safety, security, and convenience of electronic payments, enabling financial inclusion in communities where consumers have largely been unable to use formal payment products.”

MasterCard South Africa division president Philip Panaino said that, while the number of South Africans with access to formal banking products had increased significantly in the last year, the number of card acceptance locations – especially in rural and peri-urban areas – had not grown in tandem.

Blue Label will introduce innovative solutions to increase the number of MasterCard card acceptance locations in South Africa’s townships and informal settlements, with the aim of rolling out more than 15 000 new EMV-certified, contactless-ready POS terminals.

These will allow traders to accept chip and PIN and contactless payment cards for goods and services, as well as sell Blue Label’s prepaid vouchers, using a single device.

Blue Label also plans to upgrade some 7 000 of its existing terminals used in smaller spaza stores using MasterCard Mobile software. The MasterCard Mobile payment platform will enable MasterCard holders to use PIN-based debit, cheque or credit cards issued by Standard Bank, Absa, Nedbank and the South African Social Security Agency, along with their mobile phones, to pay for their purchases in-store at selected merchants.

“This is the first time MasterCard Mobile is made available to consumers in the physical retail environment,” Panaino said, adding: “This innovation is a cost-effective payment mechanism that doesn’t require customers to open another bank account.”

Both of these payment solutions will help merchants to reduce the amount of cash they currently handle while increasing sales and improving cashflow. Merchants will also be able to offer cash-back and cash withdrawals to their customers, and provide them with the flexibility to pay the way they want to.

Panaino said the new solutions, while responding directly to the needs of merchants, would increase the level of penetration of electronic payments in South Africa and help to stimulate economic growth.

SAinfo reporter