The World Economic Forum estimates that 93% of Africans have access to a mobile phone; however, Africa is still home to a large unbanked population. This, together with the lack of infrastructure, makes Africa especially suited for mobile banking, and financial institutions are looking to increase their customer base by going mobile. Mobile payments provide a high level of convenience for users, and customers in South Africa specifically, expect to be able to pay for goods and services using their mobile phones. This expectation is being further fuelled by bank and Mastercard promotional activity around the use of Masterpass, with more than 175 000 merchants in South Africa now being able to accept Masterpass payments.
What are Mobile Payments?
A payment, at its core, is an exchange of value. Mobile Payments refer to regulated financial transactions (payments) that are performed using a store of value accessed securely from a mobile wallet on a mobile device, as opposed to paying with cash or a physical bank card, in exchange for goods or services.
What is a Mobile Wallet?
A mobile wallet is a digital wallet, in the form of an app on your phone. You can securely add and store your debit or credit card details in a mobile wallet app on your mobile device and conveniently use it for making purchases via mobile payment instead of using your physical card. Some mobile wallet apps, such as FlickPay, allow for private label stored value accounts to also be stored in the mobile wallet on the app and used as tender types (e.g. Innervation Loyalty, Innervation Gift Card, Innervation Rewards accounts etc).
What is Masterpass?
Masterpass is a digital wallet from Mastercard that enables mobile QR payment and supports the enrollment of any bank issued Visa or Mastercard product into a mobile wallet app that is Masterpass enabled.
What are QR Codes and how do Mobile QR Payments Work?
A QR code, or quick response code, is a 2-dimensional bar code system that is capable of containing information and can be scanned using the camera on a mobile device.
Two types of QR codes are supported by Masterpass – Static and Dynamic.
A static QR code is one where the information stored in the code cannot be changed after the code has been generated – these QR codes would be used to store information that is less likely to change often such as merchant ID and merchant store information etc, and would typically be printed and displayed on a fixed pedestal in-store. A new code would need to be generated and printed should the information need changing / updating.
A dynamic QR code is one that is generated per transaction and would contain unique transaction details, such as transaction amount, as well as merchant information. These codes are typically displayed on the PED, POS or customer facing display, and can even be printed on receipts.
A Mobile QR code payment is a transaction performed by a customer by scanning a merchant QR code (static or dynamic) using an app on their mobile device to pay for specific goods / services at checkout. The customer would need to register their bank card on the app before a mobile payment could be made.
1. Mobile Payment with static QR code – At checkout, the customer opens the payment app on their mobile device, scans the static merchant QR code on display (this identifies who the merchant is), selects the payment card they wish to use, enters the transaction amount if required, and is then prompted to enter their ATM / Card PIN to complete the purchase. Notification of payment success is sent to both the merchant and the customer.
2. Mobile Payment with dynamic QR code – At checkout, the customer opens the payment app on their mobile device, scans the dynamic merchant QR code on the PED, POS or customer facing display (this identifies who the merchant is and also contains the transaction amount due), selects the payment card they wish to use and is then prompted to enter their ATM / Card PIN to complete the purchase. Notification of payment success is sent to both the merchant and the customer. Note that the amount payable can be changed on the app if allowed by the merchant, supporting scenarios in hospitality, for example, where the customer may wish to add a tip.
How does Masterpass work in South Africa?
Masterpass is currently enabled at over 175 000 merchants across South Africa, which includes SnapScan and Zapper merchants, generating over 4 million transactions per month. Masterpass, Zapper and SnapScan will be backward compatible, allowing certain Masterpass enabled apps to scan a Zapper or SnapScan QR code and vice versa. Currently, customers using the Zapper app can scan Masterpass QR codes, however work is still underway to enable SnapScan users to also scan Masterpass QR codes.
A customer would need to download a Masterpass enabled app to their mobile device (either a Bank provided app or FlickPay etc). All the major banks in South Africa have integrated Masterpass functionality either into their own banking apps (FNB & Nedbank), or into standalone Masterpass apps (Capitec, Absa & Standard Bank). The customer can then use the Masterpass enabled app to scan the merchants QR code to purchase goods using mobile payment.
What is FlickPay?
FlickPay is a consumer mobile app, developed by FlickPay, that enables mobile QR payment purchases through a Masterpass enabled wallet, as well as allowing private label stores of value (Innervation gift card, Innervation loyalty, Innervation Rewards etc) to be used for payment.
How can I securely accept Mobile QR Payments in my store?
The deployment of mobile QR payment, using merchant displayed QR codes and mobile apps, has created some challenges in the merchant environment. These include: notification of successful payment, typically being provided to a merchant owned mobile device and often with no reference to the lane the transaction is being processed on; the absence of a comprehensive reconciliation capability; and the creation of opportunities for fraud.
Innervation has developed a mobile QR payment processing service, which is fully integrated to merchant channels (POS, web etc), in a similar way that card payments are processed. This sees the POS requesting a mobile QR payment authorisation and receiving a response, which includes the outcome of the transaction. No merchant mobile device is required for notification and response notifications are unique to the lane that processed the request. A comprehensive reconciliation solution is provided in support of the service. Innervation also supplies new generation PEDs on a rental basis which allows for the display of merchant QR codes.
What are the benefits of enabling mobile QR payment acceptance with Innervation?
Accepting mobile QR payments is a great way for merchants to optimise their operational efficiencies and enhance the customer experience, while keeping costs low.
1. Integration to POS, using existing card payment hardware - Innervation mobile QR payments makes use of the existing merchant PED infrastructure (where feasible) to display QR codes.
2. Increased security – no PAN data is processed though the merchant environment.
3. Reduced errors, by removing the need for the customer to manually enter transaction amounts.
4. Fraud reduction – unique responses to each mobile payment request is sent to the specific lane that requested the payment authorisation.
5. Speed and convenience – Innervation payment integration ensures the most efficient implementation of mobile payments for merchants.
6. Customer convenience – customers no longer need to carry physical wallets – just their phones.
7. Minimal cashier training – a single mobile payments tender button
8. Effective transaction reconciliation – Innervation offers a comprehensive full transaction-based reconciliation service which supports transaction reconciliation between the channel (POS, web) and the transaction authorising entity.
9. Mobile payment insights – through the tracking of payment transactions, merchants are able to gain valuable insights into customer purchase behaviour such as frequency, recency and amount of spend – this, enhanced with loyalty data can be used to optimise customer offerings based on individual needs.