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Zambia gets its first contactless payment card through Absa

By David Whitehouse
Posted on Tuesday, 28 July 2020 13:11

MetroCard Replacement
Visa demonstrates a contactless card payment scanner installed at a subway in New York city. (AP Photo/Mary Altaffer)

Absa has rolled out Zambia’s first contactless payment card as the COVID-19 pandemic quickens digital strategy implementation, the bank’s CEO for Zambia Mizinga Melu tells The Africa Report.

The Visa debit card, launched on 17 July, allows customers to make small convenience purchases by tapping the card on a point-of-sale machine, says Melu. “There’s no need to touch anyone or anything.”

  • A personal identification number has to be given for higher-value purchases, though clients have the possibility to waive this safeguard.
  • Customers usually report that they are able to get out of shops quicker by using contactless payment, and their need to carry cash is reduced.
  • Absa Zambia’s card has an embedded chip, which limits the risks in terms of theft, with purchases limited to five per day.
  • The bank’s customers from outside Zambia will be able to make contactless payments if they visit the country, and Absa clients in Zambia can use the card to make contactless purchases abroad.

Banks that can offer contactless payment, and retailers that can accept it, are hoping to attract hygiene-conscious customers. COVID-19 has been a “catalyst for accelerating the bank’s digital strategy,” says Melu.  The bank also plans in coming weeks to announce a partnership with MTN to exempt banking customers from data charges. “Customers don’t want to be charged for checking their balances.”

READ MORE Botswana, Mauritius, Zambia first in line for Absa’s Timiza roll-out

The use of contactless payment methods in southern Africa accelerated rapidly as the COVID-19 pandemic unfolded.

  • According to Mastercard, the number of contactless transactions in South African groceries and pharmacies was 13 times higher in March 2020 than March 2019.
  • Of South Africans surveyed by Mastercard, 69% said that contactless is their favoured method of payment, and 71% would rather shop at retailers that take contactless.
  • Mastercard found that 78% of South Africans said they would continue to use contactless after the pandemic.
  • Mastercard, however, surveyed only banked customers, ignoring the unbanked.

Cashless Challenges

A cashless society of increasing sophistication brings its own dangers. Some of these risks for southern Africa were analysed in 2019 by the Institute and Faculty of Actuaries in the UK.

The research argues that an integrated African-wide cashless payments system could foster trade and reduce barriers to doing business between African countries. But there are significant dangers:

  • Cashless systems create cybersecurity risks, and additional costs for data and network connectivity.
  • Relying on point of sale devices assumes network connectivity and electricity availability. Sometimes those are simply not there.
  • Data coverage is also often not dependable.
  • There is a lack of integration between Africa’s cashless systems which hinders take-up.
  • Cashless systems may increase social inequality by only catering to the needs of certain parts of the population.
  • People with bank accounts do not necessarily behave in a “banked” way. Some South Africans with bank accounts prefer to withdraw their entire monthly income in one go and then spend it through the month.
  • Cashless payments risk deepening the divide between formal and informal sector workers. Payment for informal work is often in cash, but the fees which are often charged for bank cash deposits deter informal workers from cashless transactions.

READ MORE Zambia: Zanaco to enter micro-finance as part of digital push, says CEO

Bottom Line

The biggest challenge for banks in southern Africa is in extending financial inclusion and services deeper into informal sector.

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