Payment Processing South Africa
Payment Processing South Africa
With all of the talk about e-commerce these days and with improving Internet facilities that make online commerce something that is viable for a small business in South Africa, I started thinking about what options there were to process payments.
Let’s assume you have something you want to sell online. How do you go about it?
Well, first, you need a website with an online shopping capability. It is easy enough to set up an online store nowadays with open source shopping cart scripts freely available online. Many hosting solutions come with packages that are easy to install, although configuring them correctly can take some practice, especially if you are not a geek – or don’t know one (everyone should know a geek).
Then comes the important part; how does the purchaser pay you? This is the most important part of the entire online selling process, for you as the vendor at least: getting the money from the purchaser. And this is where payment processing comes in.
For a long time South Africa has been left in the technological backwaters as far as the Internet is concerned by our useless but omnipotent telecommunications giant Telkom, which made decent Internet accessibility too expensive for all but the wealthiest companies and individuals. The only way to get paid online back then was to set up your own payment gateway through your bank. This required outlay, guarantees to your bank and getting specialist web developers to write special code for your website, amongst other things. You had to have money behind you and you had to be sure of online sales. Due to the shortage of Internet users in South Africa, there have been no online payment solutions that have made processing online payments easy for smaller vendors until recently Things are slowly changing and more and more small businesses are able to offer their goods and services online.
It is nice to finally see some local online payment solutions, which will make it easier for small businesses to accept online payments. The main thing to remember is to make sure that you make paying easy and you give the purchaser a choice of payment methods. Perhaps one credit card payment processing solution doesn’t work when the purchaser tries to pay through them. Do you have a back-up solution in place, a second payment option for example? Perhaps they don’t have a credit card. Can you accept other forms of payment? These are things that you need to look at carefully before unleashing your online shop on the world.
So let’s look at some of the payment options for online small businesses.
Local Solutions
Payfast
By the looks of things, Payfast will be South Africa’s answer to Paypal. Although you can’t accept credit cards through them yet, you can transfer money to other Payfast users and pay by a secure EFT system that does not require you to give out your bank account number. What is more, you can also accept Ukash through them. They have various types of account from personal ones to accounts for business. It is free and easy to sign up and looks like it will become a popular choice for small businesses – once a fair portion of the South African web surfing public have Payfast accounts. If they extend their service to allow small businesses to accept credit cards through them, however, their popularity will sky-rocket! For now, however, they have a lot to offer and are worth trying out. Check out their website at www.payfast.co.za.
Netcash
Netcash is most probably the most capable payment processing service for e-commerce that is currently available in South Africa. It’s easy enough to sign up if you are a registered close corporation or company and there is a fee that you have to pay up front (it’s a few hundred Rand) plus they take a portion of the amounts processed by them. They will process debit orders, credit cards and more, so they should be a one stop shop for the serious e-commerce website. You can see everything they have to offer at www.netcash.co.za.
Ukash
Ukash is a new type of payment system through which people buy vouchers at their local convenience store or supermarket and use them to pay for things online. It means that you can now shop online without requiring a credit card. It is new in South Africa and so we’ll have to see how well it is accepted by the public. Bear in mind that you can accept Ukash through Payfast.
Virtual Card Services
I don’t know too much about VCS but several South African online vendors sing their praises. To sign up with them, you need to be a registered credit card accepting merchant with one of the South African banks, something that the other solutions here don’t require. They charge fees per transaction just like most of the other credit card and there doesn’t appear to be a signup fee. If you want to know more, check out www.vcs.co.za.
International Solutions
There are many payment processing companies out there but the only two I would say that are worth looking at are the following;
Paypal
The international payment solution for most of the civilized world – not us anymore, I am afraid. You can transfer money to other people and even accept credit card payments through your website. It is free to sign up and their fees are reasonable. However, if you are a South African individual or business, you cannot withdraw any money from your Paypal account to a South African bank. You can spend any money you make through your website but only online and at sites that accept Paypal payments. However, that doesn’t help when you need to pay for groceries or pay rent. Hopefully Paypal will accept South Africa into their fold one day soon so that we can also enjoy all they have to offer.
2Checkout
A company that has been around for a good while now and was one of the first 3rd party payment processing solutions for e-commerce. You need to pay to register with them and then they take a cut of the amounts you process, pretty much like all the other solutions. However, you can withdraw your money from them as a South African business. Some people love 2Checkout and others hate them. They are big and have loads of rules that you should read before signing up with them.
Conclusion
At the end of the day you should take a look at the various options and carefully weigh up what you need and which solution can offer what you need. Remember to read the fine print with all of them, especially the international companies as they are big and powerful and won’t care if you complain that you misunderstood the conditions and fee structure after the fact. It is especially important to see what their policy is about chargebacks*.
On a personal note, we use both Payfast and Netcash for our e-commerce needs (EZBIZsa and others) and they have complemented one another quite nicely so far. Setting both up and integrating them was easy and they provide decent support and documentation. However, we are not endorsing either and you must make your own mind about which solution will best suit your needs.
About the Author
Greg Bahlmann is a website designer and web developer based in Johannesburg, South Africa. He helps manage EZBIZsa web suites and is a keen supporter of promoting the Internet as a vehicle for small business proliferation.
*“A chargeback is the return of funds to a consumer, forcibly initiated by the consumer's issuing bank. Specifically, it is the reversal of a prior outbound transfer of funds from a consumer's bank account or line of credit.”
- “Chargebacks” article on Wikipedia
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