There is general growth in South African e-commerce, and online stores are set to benefit from the new users entering the market. That said, the pool of online users is still relatively small, and to make matters worse, of those who do have access to the internet, only 18% actually make purchases online. However, proudly South African virtual cash equivalent MiMoney is changing that by giving credit card-less individuals the ability to make purchases online.
Compared to regions like the United States and Europe, online shopping is still a developing market in South Africa, but Internet usage figures are currently at 4.6 million (9.5% of South Africans are online as of 2008, according to Arthur Goldstuck of World Wide Worx) and are set to grow 13% to 5.2 million people this year.The small numbers of online shoppers in South Africa is partly due to the fear of credit card fraud, but mainly owing to the fact that many South Africans, particularly the youth, do not have access to credit.
The lack of credit cards in the 14-24 age group (and in the population at large) is what drove the development of MiMoney and the identification of its key target market.
The 14-24 age group, despite not having credit cards, are active online users in South Africa.
While about eight local players have developed or are in the process of developing so-called “Wallets” to enable payments online or via mobile phone, these wallets are, as a rule, linked up to a bank account, or to a credit card, and are restricted in their use to a particular online offering or loyalty scheme.
“What sets MiMoney apart is that it is not simply a wallet, but rather a real electronic currency that can be utilised to make purchases at an increasing number of retailers,” says John Campbell, business manager for MiMoney.
'Wallets'
In the USA and in other countries, eBay popularised the use of PayPal, an electronic wallet charged by a credit card. eBay was the first to create a unique trading space between people around the world, whereby even individuals looking to sell just one or a few items could find a global market. Individuals are not necessarily qualified to accept credit card payments; a problem exacerbated by the reigning fear of giving strangers one's credit card details.
PayPal presented the ideal solution for making these exchanges possible because it provided a third party moderator for the fund exchanges. eBay users could exchange products for money, without the credit card risk involved, relying on PayPal to guarantee that the money was available in the buyer's wallet, and would be transferred into the seller's wallet once the goods had been successfully delivered. Funds could be then converted back into real money if desired.
In South Africa, however, the Reserve Bank does not allow the conversion of PayPal dollars into the local Rand, which limits the use of this payment mechanism in the local market. Also, in order to make use of PayPal, account holders must have a credit card.
Your money
“In a largely un-banked society, the PayPal model does not present a practical solution. MiMoney addresses these problems by converting hard cash into electronic money, and appealing to the South African consumer by being free from any surcharges and banking fees,” Campbell says.
Customers get MiMoney onto their phones via EFT transfers to the MiMoney beneficiary account; from certain resellers, at Ster Kinekor self service terminals and from multifunction self-service terminals being rolled out across the country. When purchasing from a MiMoney enabled website, the customer simply enters the 18 digit number of the voucher (the micode) and their mobile number into the designated fields on the payment page. Standard Bank then confirms the authenticity of both numbers, and transfers the value from the customer to the merchant's account.
MiMoney works as currency by forwarding the serial number of the voucher and the cell phone number of the user to the merchant. The merchant receives confirmation from MiMoney of the authenticity of both numbers, and Standard Bank puts the money into the merchants account.
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