The mobile swipe-card machine industry is booming and looks set to grow further, as more businesses and consumers in South Africa realise how convenient and safe the devices are.
An increasing number of establishments are enlisting the services of such machines, said Paul Kent, managing director SureSwipe – an independent supplier.
The gadgets have gained popularity as local consumers have become more confident in using them.
“It’s almost unheard of for a business not to have a portable swipe-card machine,” Kent said.
Debit cards are being used more and more in swipe machines, as opposed to credit cards – although the latter still dominates the market. Debit card users now account for about 30% of the market share, Kent said, but he predicts that by 2012 the market will be 50% debit and 50% credit cards.
Debit-card usage is “around 30% at present and growing fast”, he added.
The machines, also known as speedpoints, have grown in popularity over the last 12 months as new, faster technology has been introduced. About two years ago the industry was still using “first-generation machines that were not as reliable”, said Kent.
Swipe-card machines are very popular in the hospitality sector, Kent said. These days one doesn’t need actual cash when eating out or even enjoying a drink at a bar, as a waiter can bring the handy device to your table.
Grocery outlets, both big and small, have also introduced the machines in some of their branches. Furniture and clothing stores are using them too.
"For consumers, the peace of mind of watching the transaction taking place in front of them, and the convenience of the machine being brought to their table, if they are at a restaurant, ... is a significant advantage,” Kent said.
"This market is growing rapidly and soon we might tell our grandchildren that once cards were taken from us and swiped some distance from us,” he added.
Swipe-card machines are supplied by all four major banks in South Africa – Absa, Standard Bank, FNB and Nedbank – and groups like SureSwipe. Kent said the industry standard is for suppliers to rent out the devices and provide internet connectivity for them.
He said they charge businesses R400 (US$58) per month to rent out a mobile machine and R250 ($36) for a fixed machine. Internet connectivity is R119 ($17.20) per month for a portable machine and R180 ($26) for fixed one.
“This is the industry standard. With these machines, rental is more expensive than connectivity.”
Machines currently available in South Africa take between 10 and 20 seconds to complete a transaction. Kent said his organisation is now eyeing machines that are much faster, like those recently introduced in Brazil, which “cut the time of a swipe to less than three seconds”.
New mobile phone technology is changing the way payments are made overseas. Kent said that in the US, consumers can make purchases using their smartphones.
With these gaining significant market share in South Africa as well, the country may not be too far away from adopting such payment methods.
"The technology is advancing rapidly – from wireless links to satellite transmission – and even capacity to swipe using smartphones," Kent said.
The prevailing concern for retailers is that swipe machines use sim cards for internet connectivity, which Kent said can be taken out and used in any mobile phone. “For instance, a waiter could take this out and use it in his or her cellphone to make personal calls. It is quite difficult to do this, but not impossible,” he added.
Another concern is that older credit cards can be used without the consent of the owner, as they do not require a secret pin code for machine transactions – but banks are aware of this and have started introducing a pin system for such cards.
Debit cards are generally safer, as a user always needs to enter his or her secret pin number when buying or withdrawing money.
If a credit card is lost or stolen, it needs to be reported to the police and bank as soon as possible, so it can be barred.
“If the credit card company has frozen the account, the machine will decline the card and the credit card company will receive an alert about the transaction,” Kent said. "Overall, credit-card swipe machines can also prevent fraud or criminal activity.”