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The ins and outs of Payment Gateways for E-commerce in South Africa

November 1, 2021

The increase in digitalisation across South Africa has witnessed exponential growth in the past couple of years and has consequently boosted the e-commerce and online platform industries.  Our previous blogs explored issues of the most popular e-commerce platforms, as well as social media tips, but what else do e-commerce owners and online retailer need to know before launching their online platforms? This is where the importance of payment gateways comes into play to ensure that your online business can operate both efficiently and safely.

A woman receiving cashless payment using smart phone
Photo by Karolina Grabowska from Pexels

What does the buzz term of ‘payment gateway’ mean?

To put it simply, a payment gateway is the technology that captures and transfers payment data from the customer to the acquirer (with the latter, for example, being an online business). Payment gateways ensure the efficient functioning of the payments ecosystem and act as the middle man to enable online payments to occur between businesses and consumers. One of the main purposes of a payment gateway is thus to facilitate the authorisation and fulfilment of payments made for e-businesses and online retailers.

Woman holding a credit card and using a macbook
Photo by Pickawood on Unsplash

Choosing the most appropriate payment gateway option

Now that we know what a payment gateway is, how would you, as a business owner, decide on the best one?

The importance of deciding which payment gateway should be utilised was evident in a recent study conducted by PPRO which showed that 44% of online shoppers abandon a purchase if their favourite payment method is not available. Therefore, a determining factor of a customer’s overall experience includes which payment method options are available.

There are many factors that your business should consider when choosing the most appropriate payment gateway and some of these are listed below:

• Identify the functionalities of the payment gateway system;

• Identify what mechanisms are put in place to prevent fraud;

• Identify what data security mechanisms are in place to eliminate risks;

• Determine whether the option allows for shopping card integration;

• Examine whether the service offers multi-currency capabilities; and

• Determine the costs involved including fees for transactions, statements, chargebacks and merchant account fees.

Once these above-mentioned factors have been considered, you as the business owner need to decide South African payment gateway will optimise the payment processes of your online retail shop.

An overview of the most popular payment gateways in South Africa

1. PayGate

PayGate is a leading African payment service provider that enables businesses and individuals across the continent to accept payments online. The service offering utilises a wide range of currencies, payment methods and payment solutions (including PayGate and PayFast) to businesses of various sizes and industries. Although their services were originally more focused on larger e-commerce retailers, the introduction of Paycollect, which does not require a bank internet merchant account, has diversified its target customers.  A once-off activation fee of up to R200, and a monthly fee, may be charged.

2. Yoco

Yoco has become an ideal platform to process eCommerce sales. A unique feature of Yoco is that it allows users to integrate their WordPress store with their Business Portal in order to track in-store and online sales from a single interface. This payment gateway has no upfront costs and caps all transaction fees at a certain percentage. Additionally, it can be fully integrated with all Yoco payment solutions.

3. PayPal

PayPal is a platform that is used worldwide to process daily payments for businesses. This makes this option ideal for international payments, further supported by the fact that it is available for over 200 markets and countries. Another benefit it that it allows customers to make payments through many platforms including computers, mobile phones or tablets. In terms of integration, Paypal offers many e-commerce integration options including Shopify, WooCommerce, Magento, Xero and many more.

A phone display Gpay
Photo by Mika Baumeister on Unsplash

4. MoneyMatrix

The platform known as MoneyMatrix supports payment processing in South Africa for all credit and debit card types, as well as a range of e-wallets, vouchers, instant bank transfer, and mobile solutions.  It does not only operate within South Africa, but has a presence in over 100 countries. An advantage of MoneyMatrix is that it aims to keep the payment process simple, user-friendly and easily accessible. It offers over 180 payment options through a simple integration.

Although there are a wide range of payment gateways from which business can choose, this does not come without its challenges.

Obstacles facing payment gateways in South Africa

Although the world, and South Africa, is moving towards digitalised payments methods, many people within South Africa do not have access to the technologies to utilise these digitalised payments methods. This could lead to a lack of accessibility to payment methods, as can be seen by only approximately 20 to 22 million people in South Africa use a smartphone.

Secondly, another challenge posed is that of the cyber and data security risks posed by online platforms, both generally and with regards to online payments. In recent months, we have observed an increase in cyber attacks on banking networks and payment gateway networks. An effective payment gateway needs to be chosen by the company to minimise the risks of malware attacks and/or cyber hacking. A cyber attack would not only result in financial loss for the business but also has the potential to cause reputational harm. This is evident by the statistic that nearly 1 in every 5 consumers say that they would stop shopping at a business that was infiltrated by cyber hackers, even in instances where the problem was addressed and remedied. From the customer’s side, a lack of strong security measures could also result in them losing money. Furthermore, data breaches cause a further risk, where the potential exists for customers’ data and other personal information may be unduly exposed to third parties.

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Photo by FLY:D on Unsplash

Thirdly, it is important that the payment gateway is fully integrated with your company website. There is a possibility that your e-commerce website is not compatible with your chosen payment gateway. Therefore, research should be done to ensure that you are able to fulfil the integration requirements which may include creating an internet merchant account which links an e-commerce website to the company’s bank.

There is no doubt that new innovations are going to be evident in terms of payment gateways in the near future due to the increased online shopping throughout South Africa. This blog has explored the concept of a payment gateways, considerations when choosing one, some of the most popular payment gateways across the nations, as well as potential challenges that may be faced. It is now time for your business to start looking into how payment gateways can be used to optimise your online platform.

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