The Stitch team.

Card payments, according to Kiaan Pillay, CEO of South African fintech business Stitch, will remain a key channel for the next 20 years as transaction settlement systems grow into omni channel.

This comes as many of Stitch's large regional corporate clients look for integrated payments solutions to boost transactional agility as they expand into the rest of Africa market.

Stitch is primarily focused on enterprise payments solutions in South Africa, but it sees chances to grow into the rest of the African continent.

Card payments, according to Pillay, are a significant part of enterprise transaction settlement systems. Given the low adoption rate, he believes card payments will remain an essential channel for the next 20 years, particularly in South Africa.

South Africa has a debit card penetration rate of 38% and a credit card penetration rate of 18% as of December 2022, according to Statista data.

"As we focus more on enterprises, the emphasis will shift from how to accept card payments to how to accept cash, pay by bank, debit cards, and so on. Payments in South Arica are becoming more complex, but the payment card remains significant, and I believe it will be important for the next 20 years, but it is no longer the only payment mechanism in town," Pillay said in an interview on Tuesday.

Stitch announced a $25 million capital investment this week to extend payments channels for enterprise clients such as MTN, Multichoice, Foschini Group, and Yoco, led by Ribbit Capital, a San Francisco-based financier.

While South Africa is its core market, Stitch also has a presence in Nigeria. Stitch, on the other hand, plans to expand its payments solutions for South African businesses.

"South Africa is an overbanked market. Payment cards are being adopted in different forms as a proxy, with virtual cards becoming extremely popular. Now, Apple Pay, Google Pay, and Samsung Pay platforms are becoming increasingly popular, as are scan-to-pay ways, but underneath all of these possibilities is the credit and debit card," he explained.

Even if card payments have been evolving in the South African market, there is a need to examine alternative payment options as well, especially since bank payments are expanding at a far quicker rate than card payments, Pillay stated.

Other payment features that are rapidly growing and must be integrated into omni channel systems include EFT payments and e-commerce.

Furthermore, digital wallets are rapidly expanding, although cash remains a very dominating approach that cannot be disregarded.

"South Africa is a massive market for us, so while we have plans to expand across Africa, we still want to go much deeper in SA.We have a lot of established customers who want to expand their product lines and our payment products to various companies with which they work," Pillay explained.

Every month, Stitch conducts over R3.2 billion in transactions in South Africa. In recent months, the monthly volume of transactions on Stitch platforms has surpassed 4 million.

As it seeks to expand payment alternatives for MTN, Multichoice, Yoco, and others through Standard Bank's SnapScan, the Stitch CEO provided ITWeb Africa with insight into the rapidly evolving world of omni channel payments.

Valuable market

Omni channel transaction channels enable businesses to accept and process payments across several platforms, which is critical in a market with a highly developed and complicated financial system, such as South Africa.

"I think you're starting to see this world in South Africa where Omni channel has become really important to people offline and online, and how we combine those worlds. It's all about combining all of the 100 different things you do with payments, all of the different payment providers, all of the bank accounts, all of the different recon files, in like one consolidated system," Pillay explained.

Stitch is pursuing this with its own omni channel payments platform, PayOS, which, according to Pillay, will be scaled up to cater to large corporates in the coming months.

Turning to fraud, which has devastated Africa's fintech market in 2022, causing companies such as Zambia's Union54 to fail. Fraud via fintech platforms, according to Pillay, is a concern for banking and payment system developers.

"Fraud is definitely a big problem, and we've seen a lot of weird and wonderful and creative fraud. We have established our own fraud network; if we observe any fraudulent behaviour, transactions confirmed for disputes across any merchant, we can detect it, and we will no longer allow that same person to initiate transactions across any other merchant."

There is also an additional platform that enables Stitch, the banks with which it collaborates, and other payment service providers to more "actively" battle fraud. According to Pillay, the moment "a dispute or a chargeback is raised, we are immediately able to block that transaction and freeze the funds" across any merchant.