The next big thing in the world of payments

In Africa, cash is used in 99.1% of all transactions. That figure falls to 70% in Europe and about 60% in the US.

The problem with cash is that it's expensive. ATMs need to be bomb- and tamper-proof, and consumers need to be educated about safety. Cash-in-transit heists are a reality, and vehicles transporting cash to and from banks need to be heavily armoured and protected. All these measures cost money, and it's the consumer who ultimately pays - usually through bank charges. Cash, in its material form, is cumbersome and a liability. It is easily stolen, lost and even destroyed.

A myriad of payment options are now available to anyone with access to a computer or a cellphone - as long as a mobile network is available.

And the extensive mobile infrastructure available in most parts of the world means sophisticated banking and payment solutions are now available in truly remote areas.

But the next big thing in the world of payments, according to those in the know, is Near Field Communication, or NFC.

The application works a bit like Bluetooth in that two devices connect and share information.

In this case, the two applications are the point-of-sale device in the shop (or bus or train station) and the consumer's device, which could be a card or a cellphone or even a tag on a bracelet. NFC technology requires that the two devices be brought close together, or that they touch, to allow information to be shared and to maintain security.

The system works like this: you load funds onto your NFC device at a banking portal and then, instead of having to make a payment using cash or a card, you simply tap your instrument against the point-of-sale device and your funds are debited.

There are a few problems with implementation, the principal being that of standardisation. All point-of-sale devices will have to use the same NFC technology - and they'll all have to work with the type being used by consumers.

Google, Nokia, Apple, Blackberry and many other IT companies are starting to include NFC chips in their devices, and there is feverish activity behind the scenes in tech labs around the world to avoid being left behind.

It's no surprise that Herman Singh, CEO of Beyond Payments, a division of Standard Bank, feels it's a bit of a feather in their cap that they are the first to introduce NFC in South Africa. The trial took place last month at the Oppikoppi festival in a remote part of North West.

Essentially, each festivalgoer was given an Oppikoppi bank card onto which they loaded money using cash, credit or debit cards. All purchases during the concert were then made by tapping the card against the retailer's point-of-sale register, and an amount was deducted from the card's balance.

Despite a few teething problems, the trial was a massive success.

Sixty merchants and 15000 music fans attended the three-day festival, and the ATMs available were barely used.

Money left on the card after the festival was reclaimed via an SMS system using Standard Bank's mimoney system. The bank transferred the leftover funds onto a cellphone-based money voucher that could be redeemed at any store with the mimoney logo.

The team at Beyond Payments has also come up with several innovative ways to "mop up" cash. One of these is the e.susu (BlueSave) petty trader solution, which began operating in the informal markets in Lagos, Nigeria, earlier this month.

Instead of making the busy traders come into a branch to deposit their money, uniformed bank staff patrol the markets and collect the cash.

These mobile tellers carry a biometric thumb-print reader which safely identifies the customer.

The cash to be deposited is then given to the teller, the amount is keyed into the mobile device, and it instantly reflects in the customer's bank account.

Locally, Standard Bank's e-currency system, mimoney, allows cash to be moved around remote locations and used for purchases in its electronic form. The system has been in place in Shoprite stores for about two years and is being installed in Spars, Pep stores and even spaza shops.

Singh says about 8000 "branchises" are in place around South Africa, a boon for both store owners - because more people come into their shops to load up their cards and then stay to buy - and bank customers, who get an efficient, sophisticated service even if they live in the most remote areas of the country.

Since 2005, cellphone technology has truly revolutionised the way we bank. These days there's not much banking you can't do on your mobile phone.

FNB began offering mobile payment options two years ago. And to assist its busy customers, who have trouble remembering a series of access codes, the Pay2cell format enables FNB-to-FNB transactions to take place using a cellphone number only.

It's testament to users' ability to absorb and integrate technology that within 10 weeks of going live with the software - and with no advertising - more than 7500 transactions had been made.

Ravesh Ramlakan, CEO of FNB cellphone banking, says customer behaviour was carefully assessed in the development of its menu-based banking offering, which FNB customers can access on any handset.

What the bank discovered was that people wanted frequent access to their bank balances. If cash was available, many customers topped up their airtime, bought a Lotto ticket and then bought prepaid electricity.

All these purchases can now be made with a few clicks on a cellphone from wherever the customer happens to be sitting - as long as the networks are operational.

The FNB app is another new product, this time aimed at the bank's wealthier clients.

The app gives customers all the information they could ever want about the bank and their own accounts, and in a format that's likely to become increasingly popular as tablet technology goes mainstream.