PayPal rand support prospects slim

While PayPal sings the successes of its latest customer milestone in South Africa, the prospects of a full, rand-supported presence in the country continues to be clouded in doubt.

The payments company recently announced that it had signed up 1 million accounts in South Africa, with big name merchants such as Mr. Price, Netflorist and Singita signed up to its services.

Speaking to BusinessTech at the uAfrica eCommerce Conference, Head of Business Development for sub-Saharan Africa at PayPal, Malvina Goldfeld noted that this milestone in the country was attained organically, with no specific campaign or push to draw users to its stable.

PayPal launched in South Africa through a partnership with FNB in 2010, giving local users access to full deposit and withdrawal transaction functionality through the system for the first time.

Because of this, for many PayPal’s operations in South Africa are seen as an FNB service, which, according to the group, isn’t accurate and something it wants to educate people about.

While the partnership with FNB facilitates the transactional side of PayPal service in South Africa, it remains an independent brand and service usable by anyone with a credit card, Goldfeld said.

South African PayPal account users can pay for products through service by simply linking their credit card to their PayPal profile. This is available to anyone with with a MasterCard or Visa card from any bank.

However, in order to add and withdraw funds to and from a PayPal account it needs to be linked to a bank account. This is a service which is only provided by FNB in South Africa.

Notably, funds can be withdrawn from a PayPal account to any South African bank account through a free FNB Online profile — a service the bank launched in 2011 — but FNB’s PayPal TopUp, which adds funds to the PayPal account, requires an account with the bank.

South African hurdle

A big barrier for wider PayPal use in South Africa is that the local currency is not supported — something which is not going to change for a while.

Responding to queries about if and when the rand would be supported by the service, Goldfeld could not confirm any details, or if it ever would.

According to Goldfeld, PayPal is constantly working with regulators in prospective countries, but she could not say if or when any announcement would be made.

The group was making inroads in other parts of Africa, though, with recent launches in Cameroon, Côte d’Ivoire and Nigeria, she said.

The prospects for South Africa, it seems, look slim.

This is a problem for many local PayPal users, as this means that transactions will continue to be processed in foreign currency, which often adds a conversion fee of up to 2.5% above the prevailing exchange rate.

For merchants, this is on top of the 2.4% to 3.9% + $0.30 fee charged per transaction.

Looking forward at PayPal’s presence in the country, Goldfeld said that the company would continue to educate South Africans and South African merchants on the benefits of using the system.

The hope is that, as more people become banked, get connected, and become more tech-savvy and open to the global e-commerce market, the growth the service as seen, so far, will continue to progress organically.

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PayPal rand support prospects slim