Although COVID-19 has severely impacted our communities, the financial fallout has not been evenly distributed. It is a sad reality that small businesses and many South Africans they employ have struggled the most in this era of social distancing, lockdowns and enforced isolation.
Cash flow is an important part of SME health at the best of times. In a pandemic landscape – with restricted operations, a significant slowdown in footfall, changed consumer habits, and a preference for touchless experiences – this is even more pronounced. A NSBC study just before South Africa’s first lockdown revealed 90% of small businesses urgently needed cashflow to sustain themselves.
Before COVID-19, most micro merchants and small businesses in the country didn’t accept electronic payments, but this is changing. McKinsey’s Consumer Pulse Survey highlighted that after the crisis more than 65% of payments will be done using cards or means requiring POS devices. Mastercard’s own consumer sentiment survey revealed contactless payments are here to say, with 78% of South African respondents saying they will continue to use it post-pandemic. Safety, cleanliness, speed, security and hygiene are all reasons for this.
So how can more South African small businesses benefit from the increased convenience, safety, and potential higher spends? Point-of-sale (POS) systems can be expensive to purchase and time-consuming to navigate. But contactless technology is a game changer – it turns smartphones into both payment devices and acceptance devices, so it works with contactless cards and mobile wallets.
Tap on Phone is a POS that is simple to install, entirely portable and already available in South Africa as a result of Mastercard’s partnership with Nedbank. All that is needed is an Android device on version 7.0 or newer, enabled with NFC. Flea market vendors, food trucks and merchants in almost any sector can download the mobile payment app and begin offering it to their customers almost immediately, creating a checkout experience that is flexible, frictionless and mobile.
With the spread of the coronavirus, contactless offers not just speed and security but peace of mind, as the card or enabled device never leaves the consumers’ hands. More and more transactions are being made this way. In South Africa, the number of contactless transactions grew 13 times in March 2020 compared to March 2019 in the grocery and pharmacy categories.
Mastercard has championed the move to contactless for many years. As people look for safer ways to pay, contactless adoption is likely to accelerate even further. And as small businesses look for cost-effective ways to accept electronic payments in a drastically changed landscape, data models suggest that innovations like Tap on Phone can bring in millions of additional small businesses into the digital economy.
South African small businesses need powerful tools to transition their income streams into a digital pipeline that can generate stability and growth. Payment advocates acceptors into the hands of the people and businesses that could benefit from it most. By tapping into the possibility of a simpler, smarter and safer experience at the checkout today, they can help fuel the recovery of South Africa and set a path for growing adoption of more innovative digital payment acceptance solutions.
Find out more about Mastercard’s low-cost solutions for small businesses to unlock the power of digital payments.