Nigerian fintech giant Paystack has officially entered the South African market following a six-month pilot programme. Paystack processes online and offline payments made via cards and electronic funds transfer (EFT).
In just six years since first launching in Nigeria, Paystack has expanded into more than 40 countries and grown its merchant customer base to over 60,000 compabies. Its rapid growth, which now accounts for more than half of all online transactions in Nigeria, even caught the attention of Silicon Valley’s “hottest start-up” Stripe Inc.
This acquisition coincided with Paystack’s tentative move into South Africa, which included a trial period working with select tech startups and e-commerce stores. Paystack already processes payments by major African companies like MTN, Bolt, and SPAR.
Paystack develops and programmes tailored payment software which allows businesses and their customers to process transactions. The Nigerian tech firm is currently processing payments in South Africa made via cards – including Visa, Mastercard, American Express – EFT and Masterpass. It’s planning to introduce PayPal and Snapscan “soon”.
Looking to capitalise on South Africa’s e-commerce boom (with growth of around 40% in 2020, largely due to protracted coronavirus-induced lockdowns) Paystack has launched with a collection of plugins suited to online stores. These payment systems can be integrated with WordPress, Shopify, Wix.com, Opencart, Magneto, PrestaShop, Squarspace, and Joomla.
To attract business in South Africa, Paystack launched with a per-transaction fee of 2.9% (of the total purchase amount) plus R1.00 (including VAT). This offer extends to companies who signed up with Paystack during its pilot period and is available to others until 1 June.
That fee increases for companies who don’t sign up before 1 June to 2.7% plus R1.00 (excluding VAT). This is what the company using Paystack will be charged for every transaction it processes.
Paystack’s main competitors in South Africa are likely to be Yoco and PayFast. The latter has a 13-year head start on Paystack and became part of Africa’s largest payment service provider, DPO Group, in 2019. Payfast registered 40,000 new merchant accounts in 2020.
PayFast’s transaction fees are generally higher than Paystack’s. Every credit and debit card transaction processed by PayFast costs 3.5% plus R2.00 (excluding VAT).
Yoco, which launched in South Africa in 2015 and has amassed more than 120,000 registered merchants, uses a sliding scale based on the companies’ monthly sales to determine the percentage fee charged on every transaction.
The per-transaction fee for online payments processed by Yoco range from 3.05% to 3.4% (excluding VAT).
Business Insider SA