SnapScan, FlickPay have nothing to fear from Apple Pay

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Startups such as SnapScan, FlickPay and Zapper operating in the mobile payments sector in South Africa have nothing to fear from the expected launch of Apple Pay in the country this year, according to an expert.

Apple announced the launch of its mobile payments service in September last year, with Apple Pay – which relies on near field communication (NFC) and works for those that own the latest iPhone 6 – expected to roll out outside of the United States during 2015.

Gilles Ubaghs, senior analyst in the financial services technology team at Ovum, told Disrupt Africa that Apple Pay’s likely entry into the market would not be damaging for the likes of SnapScan, FlickPay and Zapper, but would rather assist them in building the country’s mobile payments ecosystem.

“One thing we’ve seen in other markets is since Apple launched Apple Pay, the wider market has seen a hugely heightened level of development as everyone rushes to be competitive with apple pay. Expect to see mobile payments in general get more attention from banks, merchants and payment providers across the board,” he said.

“Apple has the market visibility, and really the bling factor, that means consumers will notice it and take much more notice of it compared to other systems.”

Aside from the ability of Apple Pay to help in building the market, Ubaghs said the overall impact of the service in South Africa would be affected by the relative lack of acceptance of contactless payments in the country.

“It is there and growing, but the ability to use it in a shop will be fairly muted as it is harder to roll out compared to a QR code-based system,” he said.

“Really what this means is there will be less places to use it so the actual value and volume of transactions won’t be that huge right away.”

In terms of the future of the industry, Ubaghs said cards would not disappear anytime soon and would still account for the bulk of electronic payments.

“Mobile will keep developing rapidly and I do expect to see more use in-store, but mobile I think will see much more growth before then in mobile commerce, whereby consumers do online shopping through the phone or in an app as it becomes an increasingly critical consumer touchpoint,” he said.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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