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Payment processor Ozow has responded to the recent warning against using instant EFT to pay for goods and services.
The warning came from the Reserve Bank of South Africa (SARB) and the Financial Sector Conduct Authority (FSCA), in consultation with the South African Payments Association (PASA).
Financial regulators in South Africa raised concerns about the security of Instant EFT as it relies on providing your online banking credentials to a third party.
They said these third-party vendors, like Ozow, use screen scraping to perform EFT on their behalf and validate that the payment has been made.
Several e-commerce stores in South Africa offer instant EFT as an alternative to card payments.
However, Ozow CEO Thomas Pays has said that Instant EFT is no less secure than any other payment method.
It also reinforces financial and digital inclusion in South Africa by allowing people who do not have credit or debit cards to shop online, he said.
“Focusing on dark risks that are pervasive for the entire system appears to be focused on generating fear to protect historical revenues at the expense of consumer added value,” Pays said in a statement.
“Only this week, in its long awaited Consultation document on open banking activitiesThe SARB itself concluded that the information currently available indicates that the screen scraping practice does not represent a significant risk to financial stability at this stage ”, argued Pays.
Pays praised PASA, SARB and FSCA as “strong protectors” of the South African financial system, saying that regulators have promoted systemic stability, consumer rights and one of the best payment systems in the world.
However, he also questioned the motives behind the press statement issued Thursday warning against using Instant EFT.
Pays said it raises questions about whether legacy banking players are more focused on their revenue streams or their customers.
“For millions of South Africans, financial and digital inclusion can start with something as simple as being able to transact online without a credit or debit card,” Pays said.
“The explosive growth of instant electronic funds transfer as a payment method proves it: previously ignored by mainstream banks, an average of 20% of all e-commerce payments are based on this easy, fast and reliable means of payment.” .
He said Ozow has processed billions in transactions since its founding in 2014, without a single incident of fraud.
In contrast, the annual crime report from the South African Bank Risk Information Center for 2019 showed that total gross fraud losses for cards issued in South Africa increased by 20.5% between 2018 and 2019, from R890.3 million to R1. .07 billion.
Credit card fraud increased by 16.2% between 2018 and 2019, from R186.8 million to R217.2 million, Pays said.
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