Mobile payment services and mobile money is a growing trend in Africa, and the trend is fast evolving. Geographically based mobile payment systems seem to be the preferred route as opposed to NFC based. The two recent launches in South Africa reflect the shift in trend.
Early last month, First National Bank (FNB) in South Africa launched a GeoPayments feature on the FNB Ap –mobile banking app for smartphones — which enables users to make and receive payments within close proximity using the FNB App.
Now we have Gust Pay, also known as Gust. The new mobile payment service uses Wi-Fi to “Geo-Fence” Gust payments and merchants.
MXit – South African social network – has been using Gust since April enabling its staff to pay at selected restaurants in Stellenbosch, South Africa — using the company’s lunch allowance loaded on the Gust wallets.
Geo-fencing refers to a virtual perimeter of a geographical area as predefined by a location-based mobile service.
Normally, geo-fencing payment services, including South Africa’s FNB’s recently launched GeoPayments feature, require a Global Positioning System (GPS) device and sometimes a Global System for Mobile Communications (GSM) connection. Gust requires neither and works in the following ways:
- When the customer is at the restaurant and both the customer’s smartphone and the restaurant’s Apple iPad (iPad) are on the same Wi-Fi network, the customer orders his food / drink and opens the Gust app on her smartphone.
- The restaurant will enter the price on their iPad and pick-up the customer’s Gust profile from the Wi-Fi network and request payment authorisation.
- The customer adds a tip and authorises the payment.
In an interview, Joe Botha, founder of Gust Pay, explained that they are taking the roll-out slowly.
“We’re installing the first Cape Town merchant next week, but we’ll probably stick to just Stellenbosch and Cape Town while in Beta,” Botha said.
He also went on to shed a bit of light on current security measures Gust deploys: “Yes, it (Gust) has cryptography for transaction integrity and privacy.”
The service is expected to be adopted on a larger scale, to the rest of South Africa and Africa, given the availability of low-cost Android powered smartphones (e.g. from Huawei (Ideos) and Mi-Fone) and the uptake of mobile payment services services in Africa.
A mobile payment service such as M-Pesa in Kenya, also available in South Africa through a partnership with Vodacom, accounts for approximately 50 percent of the Kenyan Gross Domestic Product (GDP) money transactions, as reported by Mobile Money Africa earlier this year.
Some 50 percent of Kenya’s money transactions are mobile-based.
