South Africans have, understandably, long been cautious when it comes to the security of their banking details and where they log into their accounts. The country is, after all, host to tens of thousands of financial crimes every year, with losses adding up to more than R300 million ($19 million).
However, a much larger proportion of financial fraud is committed on debit and credit cards than with bank accounts. According to the most recent report from the South African Banking Risk Information Centre (SABRIC), debit card-based crimes increased 22% from 2019 to 2020. In the same period, there were zero reports of banking app software being compromised to commit fraud.
While everyone should remain cautious with their banking information, there are innovative and secure third party payments technologies and services that could in fact improve your financial wellbeing – and are safer than paying with debit or credit card.
One such provider is payments and data API Stitch, which allows customers to link their financial accounts to their favourite app or platform for the purpose of making fast, secure payments directly from their banks. For those that might be reluctant to enter their details, a better understanding of what’s actually happening on the backend may serve to ease their concerns.
“A lot of the fear stems from the idea that you’re giving that third-party app access to your bank account and that they might know or share your internet banking credentials as a result,” says Grant James, Head of Business Development at Stitch. “But, that’s not necessarily the case at all.”
“When you input your details into an app that uses Stitch, for example, those details are encrypted, and the credentials are then tokenized, stored in a secure key vault, and require a token to access that financial account,” he adds. “Credentials are anonymised – neither Stitch nor the app being used can view them, and they’ll never be shared with third parties.”
Indeed, it’s precisely because linking accounts is so much more secure than linking a card that many savings apps, in particular, have chosen to offer this payment method to their customers.
Upnup, a South African microsavings app that allows you to accumulate Bitcoin by rounding up your transactions and purchases, is one such company. It utilises Stitch to allow its customers to automatically move funds from their linked bank account into their upnup wallet.
In addition to the rounding up feature, which is similar to the “bank your change” or “savings pockets” offerings many banks offer, you can also add a flat amount per transaction, meaning that every transaction you make adds the amount and it goes into your savings wallet.
“From upnup’s perspective, it’s a no-brainer to go the payment route through Stitch rather than have customers link their cards,” says Justin Asher, Head of Strategy and Marketing at upnup. “It’s a lot more secure for customers, as well as upnup as a company.”
“For anyone who’s concerned about putting in their banking details, we can confidently say that it’s a LOT safer than linking a credit card,” he adds. “Even though you’re linking your account, upnup doesn’t store your details or use any of your personal data.”
Outside of security, an EFT-based approach has other benefits for customers too. “An EFT model is typically around three times cheaper for customers, meaning that the savings can be passed on to them,” Asher explains. “Ultimately, you receive a better quality product with a lower price and less fraud.”
As he further points out, it’s also a model that is inherently suited to South Africa, where some 82% of the population is banked. The number of people with credit cards, meanwhile, is much smaller. So, by having an offering that works through a linked bank account, the product is available to much more of the population. It’s also worth noting that it’s an approach used successfully in other markets with similar dynamics to South Africa.
Given South Africa’s poor savings culture, it only makes sense to empower people to save. Technology is increasingly allowing them to do so and build their savings while they spend. Misplaced fears about financial crime and safety shouldn’t stop them from exploring these options.
At a time of rampant global inflation, alternative savings tools will likely only become more important. With the right knowledge, people can explore those options confidently and put themselves on the path to financial empowerment.