2023 Payment Landscape Outlook | South Africa

By Sophie Proctor, March 7, 2023 · 12 mins read
South Africa

South Africa could have some turbulence in 2023 due to high levels of inflation and the Reserve Bank unlikely to move away from its rate hike cycle, overall leading to a rather bearish outlook. This does, however, give way for businesses to look to other means of money management and diversifying their financial infrastructure. This may be pivoting towards a non-traditional payment provider. 

 The digital payments market is on the rise in South Africa and is expected to grow from $14bn to $25bn between 2022 and 2027. It’s imperative to equip your business with the necessary tools to facilitate digital payments so new markets can be penetrated. Discover some of the things to look out for in South Africa’s payments landscape as we enter the new year.

Look closer at exchange rates

 There will likely be further depreciation of the South African rand against the US dollar in 2023, so businesses can expect exchange rate weakness. Keeping abreast of the most competitive exchange rates and seeking ways to lock in favourable rates is recommended for South African businesses who rely on currency conversion and international payouts.

 Africa’s e-payments market is expected to grow 152% from 2020 to 2025. Digital wallets are favoured by South Africans and are one of the most penetrated markets in Africa, with £5bn in annual revenue from e-payments. Cards however remain the most dominant payment method. Discover Verto’s digital wallets.

 Focus on SMEs

SMEs across South Africa represent roughly 98% of businesses and are critical to South Africa’s economy and workforce. Following the disruption and ripple effect of COVID-19, 2023 brings with it some opportunities for SMEs to recover, however, the challenges must be addressed. These include empowering staff to help drive business growth, finding ways to connect with customers and looking towards new markets if faced with dwindling demand. SMEs in South Africa may struggle with liquidity and cash flow management, commonly due to chasing invoices, barriers to accessing key metrics, or legacy systems which cannot keep up with ambitious growth and scaling globally.

 2023 will bring ample opportunity for micro-enterprises and SMEs to find an innovative fintech solution that will aid the payments problems that banks cannot answer to. South African banks are limited by regulations, costs, and are unable to provide e-payments and digital wallets. SMEs should look to leverage technology to reach new markets and shift demand to new client bases, accompanied by an intelligent payments infrastructure which works with them. Introducing automation with an API alongside a highly trained team is a further component which will provide the right tools to empower South African SMEs and thrive in 2023.

The Top 10 Barriers Slowing Your FinTech Business Growth.

Changing the way we pay

Financial inclusion may not be the same concern as with some African markets as the UK population is overwhelmingly banked with 97% of adults having a bank account. However, the rise of better technology and alternative payment methods give way for greater international growth and combatting market volatility. 

One key trend that is expected to continue is the shift towards digital and mobile payments. In recent years, there has been a rapid increase in the use of contactless payment methods, such as debit and credit cards, as well as mobile payment apps like Apple Pay and Google Pay. This trend is likely to accelerate in the coming years, as more and more consumers become comfortable with using their smartphones and other devices to make payments.

79% of adults in the UK use alternative payment methods to pay and transfer funds. Businesses introducing digital wallets where they can send and receive funds provides an alternative payment method with increased speed and security. This is especially beneficial when dealing with customers and other businesses outside of the UK, where having a bank account has its own challenges and restrictions. Businesses in the UK who deal with cross-border payments should explore digital wallets which allow for faster and safer overseas transfers.

It seems abundantly clear that the payments landscape in the UK for 2023 continues to be more digitally engineered, with businesses seeking more ways to make and receive payments in a faster, safer and more intuitive way. Keeping abreast of regulatory changes, the latest technology and speaking to the right people who can offer solutions is an effective way to combat any economic uncertainty and turbulence.

 Explore Verto’s Solutions today to see how we can help your business grow and overcome common market challenges in 2023. Read our CEO and co-founder, Ola Oyetayo’s reflections on 2022 and what trends he expects to see going into 2023.

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