Other parts of this series:
After my last post, which was a round-up of payment options in South Africa, I’m genuinely curious to know what you think. Do you think it’s in banks’ interests to give up their customer relationships to third parties like WhatsApp, Apple, SnapScan, Zapper and the like? What do you think banks should get in return?
Because not long after my round-up of South African payment mechanisms, I saw a news article from Nedbank announcing WhatsApp payments.
I was inclined to let it go, but on further reflection I think Nedbank’s strategy offers an interesting perspective on the whole question of payments.
From a business perspective, payments are important because Request To Pay drives transactions, and that’s where financial services players make their money.
They’re important from a human point of view as well. Paying is often more onerous than it needs to be. I’m sure I’m not the only person who has abandoned an online shopping cart or even bailed on the sign-up process because the payment process was too convoluted, time-consuming or irritating.
As I mentioned in my last post, South African consumers are spoiled for choice at the moment, especially offline. Between Zapper and SnapScan and Apple Pay and FNB’s Geo Payment, and every financial services company with its own cellphone-to-cellphone e-wallet service, why should WhatsApp payment even warrant a mention?
From a customer service point of view, the elephant in the room is: what is the bank giving up, and what is the bank getting in return?
It’s a crucial question. When it comes to something like Zapper or SnapScan, the bank is giving up the customer interaction, and gaining a transaction. Instead of interacting with the banking app, the customer is interacting with the Zapper or SnapScan app.
When it comes to Apple Pay, it’s a similar situation, except the app disappears and the cellphone itself becomes the credit card. (Full disclosure: I’m on the Android platform.) I’ve been using NFC with my bank on Android for the last year or so, and it’s been great. I don’t even have to carry my bank card around anymore. It’s good for me, but how is it good for my bank?
So now let’s look at Nedbank and WhatsApp. It appears that Nedbank is giving up the customer relationship to WhatsApp, but are they really? I had occasion to order an air-conditioner for my home recently. The whole interaction was conducted on WhatsApp. I reached out to the vendor on WhatsApp, they responded with questions, I answered them, they came back with a quote, I accepted the quote and they came and did the work. But when it came for me to pay, I had to log on to my banking app, add them as a beneficiary, pay them and then send proof of payment. Why couldn’t they send the invoice by WhatsApp and then I would simply pay using WhatsApp? It makes complete sense.
From a strategic point of view, it makes sense for Nedbank, who are underlining the point that they make business-to-consumer payments quick and easy. And I do think this is for B2C applications, especially contractors, plumbers, electricians, but potentially also for hairdressers or nail salons or even small shops that send out invoices by WhatsApp.
Nedbank is arguably inviting players into their ecosystem, which is also what they’re doing with their Avo initiative, written about here by my colleague Carmen Whateley.
For even more full disclosure, I used to work at Nedbank, although I have no knowledge about what their strategy is today, aside from what I read in the media. So as a former banker, my only caveat is that the risk should be managed. By which I mean, Nedbank is allowing WhatsApp to touch their customers’ money. So Nedbank’s responsibility is to make sure that WhatsApp’s processes are safe and secure.
Let me know your thoughts in the comments. I read them all and will respond to them. And please share this article with your favourite banking professional!