What's ahead for retail payments in South Africa in 2025?

Retail sales in South Africa grew by 2.4% last year, primarily driven by a 4.95% increase in the general dealers sector.  According to World Wide Worx, 6% of retail sales in South Africa are now online, and this is expected to reach 10% in 2025. 

While e-commerce continues its upward trajectory, in-person payments still play a key role in local retail sales. Consequently, retailers must adopt a combination of online and in-store strategies to enable more targeted customer experiences, increase cart size and boost customer retention. This year, businesses can expect new developments in personalisation, instant payments and social commerce to shape the future of retail transactions.

Unified commerce will drive better customer experiences

The increased number of channels and touchpoints consumers have with brands is driving retailers to implement unified commerce solutions and launch personalisation strategies that can improve conversion rates and strengthen customer retention.

Unified commerce refers to a more streamlined experience between online and in-person customer journeys. It includes the ability to see a real time, holistic view of customer preferences, payments behaviours and purchase habits through a centralised data system that looks across all available channels. Used effectively, the data can enable businesses to develop more personalised experiences and to make it easier and more seamless for customers to pay. 

Benefits of unified commerce include:

• Personalised customer journeys
• Flexible and consistent payment options
• Streamlined inventory management
• Operational efficiency
• Simplified reconciliation and reporting 

Retailers that use centralised data to implement personalisation strategies tend to see higher growth rates than those that don’t. At the 2024 Stitch Summit, we discussed businesses in South Africa that have already implemented personalisation strategies to optimise conversion and retention rates, including:

• Multichoice: As a leader in local streaming services, Multichoice caters to a wide demographic of viewers. Personalisation helps users find content more quickly, which promotes retention as viewers are more likely to stay on the platform.
• Stash by Liberty Group: Designed to encourage saving, Stash sees personalisation as a way to enhance the user journey and build long-term brand loyalty. For instance, users can save for their children, and as the child grows, the app offers tailored prompts and goals that align with the parent’s evolving objectives. 

Chat-based transactions will continue to gain momentum

Younger generations are using social media platforms to both inform and facilitate their purchases, creating a growing demand for social and conversational commerce, which is expected to reach $1.2 trillion globally by 2025.  

In South Africa, WhatsApp is the most popular social media platform. 44% of social media users rely on WhatsApp “for inspiration on things to do and buy”. To capitalise on this, businesses are adopting strategies to facilitate transactions within a chat or conversation, making it as easy as possible to move customers through a full purchase journey. For example, we expect to see more retailers make use of payment links to seamlessly manage payments in the chat. 

In response to the growing demand, startups and payment providers are introducing new WhatsApp-first tools to help merchants optimise their sales on the app, such as:

• Sukhiba: now active in South Africa, Kenya, Tanzania, Rwanda, Uganda, Nigeria, Oman and India, Sukhiba uses AI to enable merchants to leverage WhatsApp to drive sales, manage orders and facilitate payments.
• Mama Money Card: allows users to transact on WhatsApp without an existing bank account. The WhatsApp menu enables instant payments and purchases of airtime, data and electricity. In addition, the card can be used to complete online transactions with South African retailers.  

Ultimately, the success of conversational commerce relies on trust. To protect consumer data, retailers must implement payment security measures to insulate their systems and customers from cybercriminal activity.

Customers will continue to demand instant payments

PayShap adoption continues to grow as it approaches its two-year mark. Since its launch, significant changes have been made to encourage uptake, including an increase in the value limit from R3 000 to R50 000 and the introduction of PayShap Request. 

These new features are important to support and drive more person-to-merchant (P2M) payments, a key factor of success in instant payment systems around the world. The increase in the transaction limit and the introduction of request to pay (RTP) benefits merchants in several ways:

• An increase in the item limit means higher value retail transactions can be settled in real time. 
• PayShap Request mitigates the uncertainty of delayed payments, including the additional costs associated with failed payments, disputes and fraud.  
• Retailers that offer consumer credit, such as clothing accounts, could use PayShap Request to initiate payment requests and manage payments more effectively. 

Beyond PayShap, fast and instant transactions are quickly becoming baseline when it comes to a competitive customer purchase experience. The more businesses are able to reduce barriers to payment, the more mind and market share they’ll achieve.

Build a winning payments experience

At Stitch, we understand that achieving optimised payments in an evolving retail and digital landscape can be challenging without the right partner. Get in touch to see how our retail-focussed solutions can power up your payments stack. 

‍