Two new payment systems launching in South Africa
Local merchants will soon be able to offer a faster and more seamless checkout experience for online shoppers thanks to improvements in frictionless payments, with both Visa and Mastercard launching their respective versions in South Africa.
Frictionless payments aim to minimise the steps needed for online shopping to make transaction processes quicker.
Frictionless payment refers to reducing steps in both online and offline buying to minimise churn and shopping cart abandonment. Wait times need to be short, checkouts fast, and transaction processes effortless.
“South Africa is globally recognised for its sophisticated banking sector. However, payments still suffer a good deal of friction to ensure more secure experiences,” Elizabeth Graham, Product Manager of Payments at Entersekt, said.
“Visa and Mastercard’s new standards will soon be rolled out with the express purpose of significantly reducing unnecessary payment friction while still ensuring customer security.”
Visa’s Digital Authentication Framework (DAF) and Mastercard’s Token Authentication Framework (TAF) seek to improve transaction rates and reduce the friction of card-not-present (CNP) transactions.
A reduction in step-up challenges could also result in a better experience for shoppers. Step-up authentication is when the checkout process requires added or increased levels of user authentication to complete the transaction.
“Overall, it is the way the industry would like to move. Our goal has always been to get our customers through the checkout process as quickly as possible,” Graham added.
“Unlike the US, South African consumers are used to step-up authentication, and the removal of challenges might be a very welcome change for them – especially those who are used to shopping on international sites where faster checkout is the norm.”
Visa’s DAF came into effect on 15 April this year, with all issuers being mandated into the programme.
Mastercard’s TAF will come into effect next year, but it remains unclear if it will be mandated.
Visa said that once a cardholder has been authenticated on the merchant’s platform, all future authorisation processes must follow the DAF system.
Visa added that issuers “are not allowed to request a step-up or challenge on subsequent authentication requests from the same merchant, customer, and payment account that meet the DAF requirements”.
Moreover, Visa will make issuers liable for fraud on authenticated transactions that meet DAF requirements.
However, Mastercard’s TAF will still keep merchants liable for fraud. Merchants in some regions may still be eligible for fraud liability protection.
“We will be working closely with issuers with our risk-based authentication and running records. Our ACS processes hundreds of real-time data points within split seconds, so if there is a dispute at least they will have records to show that their systems picked up a risky transaction,” Graham said.
“It is, however, likely that there will be some adjustments after the programme goes live and the industry must keep sharing experiences so improvements can be made.”
Merchants are encouraged to act quickly and are eligible for both systems.
Cardholders will receive a screen advising them on the initial authentication, with all future transactions going through a frictionless process when shopping via that merchant and using the same card.
“Larger merchants will likely be the first to take advantage of the programme and then news of its benefits will filter down to the smaller ones. But those who do choose to be early adopters would certainly enjoy an immediate boost to their customer experience when they offer faster checkout, which could translate into a nice competitive advantage,” Graham concluded.
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