Credit cards, store cards and once-off loans will have to make room – there’s a proven, battle-hardened online retail credit option in town. It’s cardless and more secure than credit cards, merchant-agnostic and hence ‘portable’, quick and easy to get, and yours to use for as long as you have credit.
With six years and a pandemic under its belt, Mobicred’s unique all-digital revolving credit facility has attracted more than 3 000 online retailers and continues to grow fast, signing over 150 stores a month during the pandemic.
The credit provider’s customers have hundreds of millions of Rands available to spend on their accounts, despite having access to mainstream credit cards.
Turning the e-commerce tide
Getting this far has been no small feat, given South Africa’s slow-moving e-commerce scene. While it has picked up speed lately due to COVID-19, SA’s online retail still makes up just 1.8% of total retail activity, compared to the US at 18% and the UK at 30%.
Mobicred CEO Jason Sive explains that South Africa has a high proportion of physical mall space per capita, and SA shoppers clearly love and trust the physical buying and browsing experience.
But the tide may soon be turning.
According to a recent study by Nielsen, 68% of SA consumers reduced their visits to physical supermarkets during COVID-19, while 37% increased their online shopping activity. FNB has seen average e-commerce spend grow 30% year-on-year during the 1st half of 2020, while the average bricks & mortar spend declined 12%.
Businesses are responding: RMB estimates there are now about 5 000 businesses online in the country with a turnover of R100 000 or more. Across all segments this may be much more, as payment gateway PayFast reports having more than 70 000 merchants as clients.
“For the first time we are seeing the more traditional brick and mortar stores taking online seriously,” says Sive. “We believe this is what it will take to really move the needle in terms of online penetration in the retail environment.”
But more work lies ahead. The pandemic has raised consumers’ expectations that all businesses should offer digital payment options for everything – from hailing a ride to paying for groceries and takeaways.
RMB reports that e-commerce card purchases currently make up 8% of total card purchases in SA. However, as credit card enquiries fell by 49% year on year in 2020 (according to TransUnion), alternative credit options are becoming a major contender in the digital payments’ environment.
“A key success factor for retailers will be offering consumer choice,” says Sive.
What Mobicred offers retailers and shoppers
To help retailers – both bricks and mortar and online – succeed on the Web, Mobicred offers a virtual mall where they can display their special offers. “All Mobicred customers can view these specials on the Mobicred Mall on one page. It’s a value add to both retailers and customers,” he says.
But more importantly, Mobicred makes it easy for participating retailers to accept consumer credit – up to R35 000 per customer to spend at any participating e-store and pay back over 12 months with one single monthly payment. Most customers, however, continue to use and pay off the facility on a monthly basis, using it as their preferred online tender type for both small and large purchases.
“There’s nothing else like it in the market,” says Sive. “Big retailers may offer store credit, but consumers don’t like to apply for a new line of credit at every store. Mobicred offers one application, one account and one line of credit with a large variety of stores.”
Mobicred also differs from credit cards, he says. “Most people think of revolving credit as credit cards, and yes, credit cards are a form of revolving credit. But Mobicred is not linked to a bank account or any other card and therefore not vulnerable to card-based fraud. It is a stand-alone facility.”
He explains that Mobicred users manage their purchases via username and one-time PIN, which is highly secure. “With Mobicred, a scammer would need access to a customer’s password, mobile phone and the OTP sent to it, as well as their sign-up email address to defraud them.”
A third comparison Sive wants to put to bed is with micro-lenders. “We offer very competitively priced revolving credit that replenishes itself as it is paid off, for as long as the consumer remains active. Customers can transact at a variety of stores. It is not a loan per purchase, which can be a dangerous and expensive form of credit.”
And how easy is it for merchants to integrate and offer Mobicred to consumers?
Mobicred provides an application programming interface or API – a strategy that took off with bigger retailers but proved daunting for smaller players without the necessary development capacity.
“So, we simply integrated with all the payment gateways,” Sive says. “Now the smaller retailers looking to go live immediately can do so via their gateway. We do the heavy lifting so the smaller players can plug and play.”
He adds that retailers have overcome their initial objections to the new form of credit. “Merchants are recognising that customers want choice in all aspects of the online experience, including delivery, click and collect as well as payment tender types.
“Obviously, certain bigger retailers offer their own cards or store credit, but global trends show consumer choice is a non-negotiable. As for the smaller guys, Mobicred offers them a way to integrate easily with a safe and secure payment option. And as concerns shoppers – if they’ve never heard of a store before, they can be confident that a brand that is integrated with Mobicred is a legitimate brand, and their service and return policies are of the required standard.”
As a result of ticking so many boxes with shops and shoppers, retailers big and small have signed up, including Dis-Chem, Takealot, Superbalist, Incredible Connection, Hifi Corporation, Flysafair, Clicks, Onedayonly, BidorBuy, iStore, Game, Netflorist, Loot, Sportsmans Warehouse and Travelstart.