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Shop Faster, Safer: Visa & Mastercard’s Game-Changing Payment Solutions Hit South Africa

Published by
WIlliam Dube
  1. Visa and Mastercard are introducing their frictionless payment systems, Digital Authentication Framework (DAF) and Token Authentication Framework (TAF), to South Africa, enhancing online shopping experiences by making transactions faster and more efficient.
  2. These payment systems aim to minimize friction in online transactions while maintaining security, improving transaction rates, and reducing cart abandonment and churn rates.
  3. Early adoption of these frictionless payment solutions by merchants can offer a competitive advantage, as the systems will lead to increased customer satisfaction, loyalty, and ease of transactions.

South African online shoppers can anticipate a faster and more seamless checkout process, as two major payment giants, Visa and Mastercard, prepare to launch their respective frictionless payment systems in the country. These innovative payment methods are designed to minimize the steps involved in online shopping, making transactions quicker and more efficient, while also reducing cart abandonment and churn rates.

Frictionless payment systems have become increasingly popular worldwide, as they help streamline both online and offline purchasing experiences. By shortening wait times and simplifying transaction processes, these systems ensure a more enjoyable shopping experience for consumers. Elizabeth Graham, Product Manager of Payments at Entersekt, explains, “South Africa is globally recognised for its sophisticated banking sector. However, payments still suffer a good deal of friction to ensure more secure experiences. 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) specifically target the improvement of transaction rates and friction reduction for card-not-present (CNP) transactions. Additionally, by decreasing step-up challenges, these payment systems could provide an even better experience for shoppers. Step-up authentication is a process requiring additional or increased user authentication levels to complete transactions.

“Our goal has always been to get our customers through the checkout process as quickly as possible,” Graham adds. “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 has already come into effect as of April 15, with all issuers being mandated into the programme. Meanwhile, Mastercard’s TAF is set to launch next year, though it is still uncertain whether it will be mandated. According to Visa, once a cardholder has been authenticated on a merchant’s platform, all subsequent authorization processes must adhere to the DAF system. This means 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.

Furthermore, Visa will make issuers liable for fraud on authenticated transactions that comply with DAF requirements. On the other hand, Mastercard’s TAF will maintain merchant liability for fraud, although merchants in certain 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 states. “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 can be eligible for both systems. Cardholders will receive an initial authentication screen, and all future transactions will follow a frictionless process when shopping with the same merchant and 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 concludes.

As Visa and Mastercard’s frictionless payment systems gain traction in South Africa, online shoppers can expect a more streamlined and enjoyable experience. The adoption of these innovative systems will not only enhance customer satisfaction but also provide a competitive edge for merchants who choose to implement them early.

As South Africa continues to embrace these new frictionless payment technologies, it will likely pave the way for further advancements in the nation’s e-commerce sector. With improved transaction rates and reduced friction in online shopping, both local and international businesses stand to benefit from the enhanced ease of transactions, leading to increased sales and customer loyalty.

In the coming months, the successful rollout of Visa’s DAF and Mastercard’s TAF will provide valuable insights for other markets looking to implement similar frictionless payment solutions. By closely monitoring the results and sharing experiences, the global payments industry can work together to refine and optimize these systems, ultimately providing better shopping experiences for consumers worldwide.

WIlliam Dube

William Dube is a finance and economic news expert with over 10 years of experience in economic anaylsis, financial product assessment and market analysis. With a numerous certificates from prestigious universities including but not limited to Yale University and the University of Pennyslivenia. William specializes in providing insightful news developments in South Africa and commentary on investment strategies, risk management, and global economic trends. You can contact him on william@rateweb.co.za

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Published by
WIlliam Dube

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