What mobile payment is and the opportunity this opens to SA businesses

mobile payment

The mobile payment solutions industry in South Africa is a sleeping giant that is finally stirring. Today, there are approximately 81 million mobile carrier subscribers spread across Vodacom, MTN, Cell C and Telkom. The possibilities are therefore plentiful for any business that positions itself to receive mobile payments in exchange for goods and services.

Cellphone operator user volumes

Source: Mybroadband

Understanding what mobile payment offers as a solution is obviously important if you are considering integrating this solution into your business.

In this blog post, we’re going to explore what a mobile payment solution is, the types of mobile payment solutions available, and why the South African consumer market is primed for an increase in mobile payments. By the end of this blog, you should have a firm grasp of the opportunity available to businesses looking to evolve the way they cater to customers and capture their share of this growing market.

Defining Mobile Payment

Mobile payment is a term used to describe the payment for goods or services with the use of a mobile phone.

Mobile payment users are able to complete payments for goods and services without the need to produce cash, credit cards, debit cards or cheques.

The five common mobile payment models

There are five common mobile payment models, with each being used by either banking institutions or third party providers. These five models are as follows:

  1. Mobile wallets: Typically in the form of an application that acts as a digital wallet, mobile wallets allow you to complete payments using your mobile device. At present, there are three kinds of mobile wallets that are distinguished by the provider thereof. The three types of mobile wallets providers are:
    • Retailers: A retailer decides to develop their own mobile application which includes, among mobile wallet capability, loyalty or rewards offers and notifications of special deals.
    • Financial institutions: These include banks, credit card issuers and credit unions that develop a mobile wallet for use by their bank account holder in retail outlets.
    • Intermediaries: These are businesses that have developed mobile wallets that can contain cards from multiple issuers.
  2. Card-based payments: These are in the form of simple mobile web-based payment systems that can also include a credit card payment flow that allows a consumer to enter their card details to make purchases.
  3. Carrier billing: These typically include the use of SMS and USSD as a means for users to pay for services.
  4. Contactless payments Near Field Communication (NFC): This technology requires no authentication and payment is by simply waving the user’s mobile phone near the NFC reader module.
  5. Inter-account transfers: These are near real-time transfers of funds between a payer and a payee’s bank accounts.

While the above are the most commonly used models for mobile payments, other technologies like QR codes and one-time pins are gaining traction. The TuYu mobile rewards app issues both a QR code and one-time pin that can be used to complete a payment at over 70,000 till lanes across South Africa.

Above: TuYu mobile wallet user pays for a coffee using a unique QR code.

Above: TuYu mobile wallet user pays for a coffee using a unique QR code.

Mobile phones as enablers

We’ve come a long way since the very first mobile phones were introduced to South Africa in the early nineties. We’ve moved from 1G to 4G, and LTE networks. Today, smartphones have more processing power and RAM than most PCs made in 1994, and they’re just a little larger than a desktop PC mouse. Plus there’s more – applications have begun to shape the way we live our lives. We’re able to stay in shape with fitness apps, watch our caloric intake with diet apps, find our way around new places using Google Maps, and even keep an eye on our homes from afar with surveillance apps.   

But how have these advancements shaped the way businesses look at mobile payments as a viable solution? To answer this question, we need to investigate how South Africans use their mobile phones.

South Africans lead mobile phone adoption in Africa

According to Pew Research, there are more South African adults who own mobile phones than in any other African country. In comparison to the other 40 countries surveyed, smartphone penetration in South Africa is at 34%, with 52% of South Africans being feature or “dumb” phone users, and only 10% not using mobile phones at all.

On their own, the statistics above tell a very interesting story. But the story of how active South Africans are on their mobile devices is best illustrated by the amount of time they spend online.

According to We Are Social’s 2016 Digital Report, South African mobile phone users spend just over five hours and forty minutes between the internet and social media usage every day.


Time spent with media

Source: We Are Social

While two hours and 43 minutes appears to be a considerable amount of time for the average South African to spend on social media, one of the more interesting statistics is that users spend 26% of their time accessing mobile banking solutions.

Mobile transactions are growing

Mobile commerce isn’t slowing down either. According to PayPal’s Third Annual Cross-Border Consumer Report, mobile spending is projected to increase to 128% by 2018.

This data indicates that South Africans are comfortable with mobile applications (beyond social media). Another interesting deduction is that mobile spending and the use of finance-related applications is becoming commonplace, showing that South Africans are becoming increasingly comfortable with the idea of mobile transactions.


Mobile activities

Source: We Are Social

Mobile payments drive business

At TuYu, we’ve also noticed two interesting trends that prove mobile payment usage to be on the rise. The first is that our mobile wallet users are very active, resulting in 91% of mobile cash being used. Secondly, with the increase in our national footprint of retail partners that accept TuYu mobile payments, we’re able to note buying habits as they develop over time. We’ve seen an increase in customer buying power as more users opt to use their mobile wallets across South Africa.


Mobile payments present South African businesses with the opportunity to evolve the way in which they cater to their customers. The fast-paced mobile phone adoption rate also impacts the way South Africans transact, proving that mobile payments are real and here to stay – and that this is an opportunity for businesses to capitalise on.

Speak to us for more on how your can integrate mobile payments into your business.

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