🤑 How 75% of SA Choose to Pay…
Hi there,
Who’s a good boy? This Japanese man, apparently, after he spent R375k to transform himself into a dog. Because woof.
In this Open Letter:
- Payday: How 75% of SA choose to transact.
- Space funerals, poor CEOs & Namibian crypto crackdown.
- Hustle 101: 5 Ways to do more with way less.
- Poll results: All your fave sports teams.
- Startup ideas: Refer friends, get juicy opportunities.
TRENDING NOW
It’s Official: How 75% of SA Choose to Pay
One major positive from Covid lockdowns was how fast SA adopted tap-to-pay technology. Mastercard now reckons 75% of card-using South Africans use it as their primary means of payment.
And it’s now even easier with Apple Pay, Google Pay, Samsung Pay etc. active in SA – seriously, I haven’t seen my wallet in weeks. Apple Pay already overtook Starbucks as the US’s #1 mobile payment solution back in 2019 and currently has an estimated 535 million users worldwide.
But it’s not just in retail, banking’s getting face paint too.
In fact, 60% of South Africans believe that in 5 years’ time, banks will have no need for physical branches as 73% prefer their mobile banking app for day-to-day banking.
Our phones are becoming our wallets
PayShap, the new South African rapid payment technology we told you about in March, allows instant interbank transfers for low fees. And they recently claimed to have handled 800k transactions at a total value of R660 million already.
(Interesting to note: PayShap was meant for microtransactions, yet their average transaction value is ± R 825, hinting that their initial poor user experience and confusing fees hampered adoption.)
Nonetheless, Payshap claims over 300k South Africans have registered PayShap IDs (the unique identifier you need to transact) so far, and expects higher adoption as more banks join. And with Capitec announcing its PayShap fees – Free under R100, R3 up to R3000 – this might just have a crack at taking cash out of the game.
The potential is massive. Rapid payment technology can reduce the amount of cash in society, which is already scaling elsewhere in the world:
- India’s rapid-pay system UPI surpassed 9bn transactions in May this year.
- Brazil’s digital payment system Pix recently became its most used payment method.
- Australia’s reducing its cash supply by $1 billion by limiting how much cash people can withdraw.
A new era of payments
With tap-to-pay becoming more acceptable on the consumer side, it unlocks major benefits and potential opportunities. Where, a few years ago, companies like Yoco gained a market-leading position by simply offering a cheap device, the next frontier probably lies in creating new in-store experiences.
Instead of having a “till point” in a store, sales reps can walk around with handheld point of sales that are NFC-enabled and can thus accept tap-to-pay. This does a few things:
- Shortens the time from shelf to payment, reducing friction and increasing sales.
- Reduces staff overhead as your sales rep can also perform checkout.
- Saves floor space and allows for creative store layouts.
- Removes cash, which reduces costs, risks and admin.
For FMCG retail, this also means faster checkouts which could optimise staff costs and increase customer satisfaction.
As far as using a mobile device for banking goes, technology like PayShap, when executed well, with a good user experience, could do wonders for financial inclusion.
- Whilst B2B e-supply solutions like YeboFresh makes orders and delivery easier for informal shops, it’s risky for them to take cash payments. Yet most of these shops deal mainly in cash, so transacting is tricky. A digital cashless solution would really help here.
- Instant, low-cost interbank payments can also accelerate the adoption of digital payments in transport, specifically minibus taxis. This could make it substantially easier for governments to implement the subsidy for taxis we spoke about, better integrating them into the public transport system.
Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).
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OVER TO YOU
How do you prefer to pay?
Vote to see how others voted.
- 💰 Cash
- 📜 Cheque book
- 💸 Tap-and-go with card
- 📱 Apple Pay, Google Pay or Samsung Pay
- 💳 Chip and Pin
- ⚡ SnapScan or Zapper
- 👍 PayShap
- 😎 Crypto
Login or Subscribe to participate in polls.
IN SHORT
🥊 3. 2. 1. Fight. Arguably the fight of the century (perhaps not if you’re a combat sports purist) Musk vs Zuck is happening. Elon has said the fight will be live-streamed on X (fka Twitter) – with proceeds going to charity. I mean, marketing stunt of the decade to get more eyes on your platform…
⚰️ Space Funeral. Seems like the medical teams at NASA are already figuring out what to do with one of the Astronauts should they die on the 300-million-mile mission to Mars. Low orbit and moon missions seem pretty much sorted, but what to do with a body should they die on the way to, or on Mars?
🪙 Kenya believe it? Remember when we said how Worldcoin could be a foundation layer for UBI? Well, it rolled out recently in Kenya and between the “security concerns” around the queues lasting days and data privacy & security, so much chaos ensued they shut it down.
🇳🇦 Crypto Law. Neighbours Namibia signed a bill into law that recognises virtual assets including cryptocurrencies — meaning all crypto operators would have to comply with new regulation or face fines or imprisonment. Funny enough, despite the new legislation, Namibia’s central bank is still warning that virtual assets are not legal tender and citizens should transact at their own risk.
🧐 Poor CEOs. The 1% are suffering too, people. A new study has shown that the average pay of an S&P500 CEO has dropped to only R300 million a year compared to the year before. Yeah, looks like everybody is tightening their belts in this economy.
BUILDER’S CORNER
5 Strategies for Doing More with Less
It’s a running joke how scarce early-stage startup funding is in SA. Seriously. We’re even lagging behind other African countries here. So whaddya gonna do?
Play the cards you’re dealt, of course. Bootstrapping is an art form, a way to get going and grow without outside capital. (In fact, we’re bootstrapping The Open Letter!) And, when you’re bootstrapping, nothing is more important than capital efficiency.
So, how do you make the little money you have go as far as possible?
5 ways to stay capital efficient
- Get metrics in place ASAP: Numbers don't lie, and understanding costs and incomes from the get-go provides clarity. Proper financial tracking and metrics help you make informed decisions, so you can optimise spend and know exactly where to improve.
- You can use a tool like Google’s LookerStudio (free) to pull in data from various places and run it like a central startup dashboard.
- Leverage technology: There are loads of free and affordable tools available to help you streamline, automate and enhance productivity. From open-source software to cloud solutions or collaborative tools, tech can help you trim overhead costs and boost efficiency.
- Share this newsletter with 1 friend and when they sign up you’ll get our list of Top 50 tools you can use to move faster and cheaper.
- Hire smartly: Before expanding your team, consider contracting out certain roles, especially if they aren't central to your business. Embrace the gig economy or think about part-time positions. When it is time to hire, invest in versatile individuals capable of multitasking, to maximise return on each salary.
- We consult a few startups on various aspects of early-stage building. Get in touch and let's see how we can help you grow.
- Set targets and stand firm: Sometimes, the path to your goal can seem insurmountable without pumping in more funds. Instead of relenting, set your targets and be unwavering. Push your creativity to the limit, hustle relentlessly, seek strategic partnerships, and don't be shy to ask for favours or collaborate. Many times, audacity and resourcefulness can achieve what money cannot.
- Quarterly, monthly and weekly targets together with someone external that can keep you accountable is worth a lot. A good accelerator program can help you with this, but be sure one of their key contributions to you as a founder is accountability.
- Lean operations and Agile methodologies: Adopting a lean startup approach allows you to swiftly test and validate ideas with minimal investment, cutting down the risk of major upfront costs. This helps ensure you only invest in ideas with demonstrated potential. Pair this with agile product development methodologies, so you can iterate and get products to market faster while getting more feedback.
- The Lean Startup is part of startup folklore. Whilst it shouldn’t be treated as the only way to build a startup, the thinking presented in the book is still helpful today.
Got some stellar workarounds for doing more with less? Hit reply and let us know…
THE RESULTS
Ok, now we’re curious. We gave you a list of top soccer, rugby and Premier football teams and asked which are your faves last week. And like a quarter said none of those, thank you very much…
🟨🟨🟨⬜️⬜️⬜️ 🌞 Sundowns (12%)
🟨⬜️⬜️⬜️⬜️⬜️ 🪓 Chiefs (4%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏴☠️ Pirates (8%)
🟨⬜️⬜️⬜️⬜️⬜️ 🐂 Bulls (8%)
🟨🟨🟨🟨⬜️⬜️ ⚡ Stormers (16%)
🟨🟨🟨🟨⬜️⬜️ 🔴 Liverpool (16%)
🟨🟨🟨⬜️⬜️⬜️ 🏟 Manchester United (12%)
🟩🟩🟩🟩🟩🟩 🤷 None of the above (24%)
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