Facebook branded debit card to be unveiled in SA
- Published on 22 August 2012
Creators of social network banking application, ZunguZ, plan to launch the world’s first Facebook branded Visa debit card in South Africa, in a move that an analyst says could help boost the card maker’s market share in the country.
ZunguZ is a Facebook application that allows users to connect their online banking details to the social network to transfer money to their friends by just clicking on their profile image.
Users wanting to send money have to enter their bank account details, while those looking to just receive money simply sign up to the app.
The startup says it works with all South African banks to implement this application. According to an interview the startup had with radio station 702 earlier this year, the company uses a First National Bank (FNB) account to ‘store’ all money that is set to be withdrawn by those that have received funds.
And the company’s founders have told ITWeb Africa that they are planning to unveil a Facebook-branded debit card in the next six months, allowing those who have funds in their ZunguZ account to withdraw cash from any Visa automated teller machine (ATM) or make purchases at any retail outlet.
The company’s joint chief executive officer, Robert Sussman, told ITWeb Africa that the first batch will consist of almost 40,000 Facebook and ZunguZ branded cards.
“This will be the first global card and South Africa is going to be the first country to offer it,” said Sussman.
“ZunguZ is the first Facebook payment application globally and it’s also the first approved Facebook app in the Facebook app store. This is all from South Africa – and it’s an amazing thing for the country to be featured like this,” Sussman added.
Sussman attributes South Africa’s potential growth within the offline banking market as one reason for their decision to launch a debit card for their social network money application.
“We still see a very big need for plastic, a lot of the market uses plastic at the moment, and what we actually want to do is bridge the gap between online and offline purchases,” he explained.
According to reports, SA’s banking retail customer numbers between 2011 and this year reached almost 35 million out of a population of 50 million– indicating the number of people who bank with the top four banks namely Absa, Standard Bank, FNB and Nedbank.
Furthermore according to statistics released by Visa’s Global Tracking Survey, debit cards now account for 42% of the South African card market, with consumers spending more using their plastics.
However, the study did say that despite the increase in debit card ownership, SA still holds one of the largest proportion of banked individuals in the world that are not cardholders at 20% of all banking customers.
Thecla Mbongue, a senior research analyst at Informa Telecoms & Media Group adds that ZunguZ’s latest offering could help a card company such as Visa to boost its user base.
“As far as services provided by social networks are concerned this is indeed an innovation, but it is first and foremost a way for Visa to increase its network across Africa,” she said.
Mbongue adds that South Africa’s technology and banking penetration makes the country an ideal destination to launch such services.
“It is no surprise that the (Facebook and ZunguZ) Visa card is pioneered in South Africa. At the same time, if the product is meant to target the unbanked segment, the South African market also has a large unbanked segment on global standards,” she said.
Independent mobile money analyst Merlin Stone says he is a bit sceptical about the uptake of the Facebook branded Visa debit card, especially given the increase in competition of payment systems.
“Google wallet has turned out to be not very successful,” he said.
“In addition, the money transfer market in Africa is primarily for people who do not have computers or smartphones but only simple mobile phones, so this means that Facebook will be too advanced an application for this,” he continued.
In a previous interview with ITWeb Africa Sussman did not shy away from admitting that uptake of ZunguZ has been slow, although he did not mention the number of ZunguZ users.
But the startup could be hoping to improve its prospects with its debit card.
Moreover, in terms of launching the debit card elsewhere he says that the current plan is to get the product established in South Africa first before moving to other markets.
“The next launch of the programme will be for the Middle East and Mexico and we will be working with Mastercard for those regions, right now the focus for the ZunguZ Facebook branded visa debit card is South Africa,” he concluded.