Eve Dmochowska
Eve Dmochowska

One step closer to Paypal

As any South African who has tried to make money online undoubtedly knows, Paypal does not allow us to receive funds via its system. We can only use it to spend money at other merchants, most often via our credit card.

This has been a huge bottle stopper in the e-commerce climate in this country. PayPal is seen as a secure method to buy online, because the customer never reveals his credit card details to the merchant and thus avoids potential fraud, misuse or abuse of the information. And by not having access to receiving funds via PayPal, South Africans who wish to legitimately collect money from others online are forced to get a merchant number, which in itself is a lengthy and expensive method. (I say legitimately, because there are ways for us to get a PayPal account if we use some loopholes and stretch the system’s boundaries. Email me if you want more info ;-))

Now a South African venture is aiming to make e-commerce easier for South Africans. Payfast.co.za, which is now officially out of beta, allows merchants to collect online payments from other South African customers via instant EFT.

There are a number of ways you can collect money: by sending a request (invoice) via email, or by including a “Pay Now” button on your website (this works best for fixed amounts, such as conference registration). You can also use it to receive payment for a shopping cart purchase (where there is more than one item and the amount varies depending on the customer), but that requires a bit more coding on your side.

The unfortunate caveat is that all payments are made by EFT from any of the four major banks and you cannot pay by credit card. That has obvious limitations, the most striking of which is the fact that it limits you to South African shoppers only. Should you want to sell a product or service to international customers, you would need another (maybe additional) system. Payfast says it is working on credit card integration and should have it in place by the end of 2008. From my experience I ignore any timeline promises on any website, but I do hope that this feature is added soon.

Nevertheless, even with this limitation, I can see a lot of opportunity for Payfast. For instance, I am about to start offering short courses on social media to the public. Payfast is a great way for me to collect the payment for these upon registration. Bidorbuy (an investor in Payfast) has integrated it into their auction engine. This allows buyers who do not have credit card facilities (a large chunk of them, I would imagine) to immediately pay for their winning bid/purchase via EFT. The benefits to the seller are obvious.

Another benefit is that sellers no longer have to wait for two to three days before they receive confirmation of the EFT. It is authorised immediately. So, in theory, a retail shop can sell a high price item to a customer, send him an email request to pay the invoice, the customer pays immediately via EFT, and shop gets immediate confirmation and can release the goods. At present, the confirmations usually come form the banks themselves via fax and there is great opportunity for fraud.

So no, it’s not Paypal yet. But it does fill an important gap that will allow a lot of people who would otherwise struggle to collect money online to do so effortlessly. And hopefully it will play a pivotal role in promoting trust and usability in local e-commerce.