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Duncan Arthur, an independent payments, mobile and African banking expert, told HumanIPO international companies or individuals with no local presence may as well be chasing the “Holy Grail”, as it is the native startup scene where the real success can be found.
He highlighted the fact only those with a banking licence can create e-wallets in South Africa - meaning even the giant operators are tied to the banks - and only banks can issue e-money.
This means it is the big banks which are already focusing a lot of time and resources on creating their own solutions.
HumanIPO reported earlier this month how Standard Bank was already testing its new Open Pay platform, which they believe may negate the need for the payment giants of Visa and MasterCard in the future.
Regarding further difficulties that arise for outsiders to open up shop in the country, Arthur said: “Companies are measured according to how much business they spend with companies and individuals representing the previously disadvantaged.
“If you are based in Shanghai, you probably weren't disadvantaged by apartheid. The incentives are big and the penalties for not meeting targets large.”
Despite the obstacles preventing e-wallets from being created in South Africa, Arthur added there was hope.
He added: “South Africa has some nuances that make it very different to other African markets. I can't say 'comparable African markets' because there aren't any.
“Startups are where it's happening, they often have existing creative relationships with the banks who are watching their progress closely.
“I'm aware of two companies right now looking for a solution and a couple more that just need a push. They bring a whole new set of demands though.”
Among those demands is capital, which often startups do not have. Others include the foreign exchange risk and the fact there is not much flexibility with an e-wallet, meaning there can be many players all offering the same thing.
