MTN introduces debit card online transactions

MTN MobileMoney has introduced a new e-commerce payments system that will allow consumers to buy products and services online using their debit cards.

Generally, the only mode of online payment available in South Africa is using a credit card. Credit cards incur a significant transaction cost for the seller, limiting the range of electronic products they feel able to offer. In addition, it is estimated that only around three percent of South Africans own a credit card.

The new technology, called payD, can transform any cell phone into a secure and encrypted point-of-sale terminal. Users register their card details to their cell phone number, which they quote to sellers. The consumer then receives an SMS message requesting their pin number.

The system is said to be just as secure as transactions carried out in store, as the seller never sees the buyer’s debit card number and the message containing the pin number is removed from the phone once the transaction is complete: no one else may use the phone as a transaction mechanism without knowing the pin number.

The technology is currently being used by budget airline 1time. Rodney James, 1time CEO, said the company had long been searching for “secure and convenient alternatives to the cumbersome electronic funds transfer or bank deposit payment <span class="scayt-misspell" data-scayt_word="options." "="" data-scaytid="1">options.”

At present, payD is only available for Standard Bank and Nedbank pin-based debit cards on the MTN and Vodacom networks. However, the technology will be rolled-out on other networks and for other banks within a year.

It is expected that small retailers' profits will increase significantly following the introduction of payD.