Banking

Despite the impression on most websites that you need a credit card to shop on the Web, that is not entirely the case. In this article I present some alternatives to using a credit card.

Last time round I explained how to shop online, but my assumption were based on the fact that most e-commerce web sites require a credit card. Not to worry, though: if you’re savvy with your finances you’ll have noticed there are real alternatives to this emerging in South Africa. More and more South African sites, like Kalahari.net, are offering alternatives like direct deposits, electronic transfers, eBucks rewards points, and various other options.

The biggest and most popular online shopping destinations offer a selection of the following different payment methods:

• Credit Card – the universal standard for online payments accepted worldwide. Since the dawn of ecommerce in the mid 1990s credit cards have ruled supreme. VISA and MasterCard have been great beneficiaries due to their worldwide recognition and trust.
• Bank Deposits / Electronic Funds Transfers (EFT) – there is growing acceptance of this method due to the growing popularity of Internet banking in South Africa.
• eBucks – the First National Bank-originated rewards program has picked up a lot of loyal users since its launch a few years ago and you can use it at a selection of online merchants as a method of payment. Includes the likes of CNA as rewards partners.
• Standard Bank AutoPay – this is open to Standard Bank clients for direct payments to selected online retailers from their personal bank accounts.
• ABSA Online Payment – a security measure which has become a popular choice among consumers as you never have to send your REAL credit card over the Internet again. This system generates a unique credit card-16 digit number which can be used instead of your own credit card number. The major benefit here is that debit card holders can also use this payment method. I’m not sure if this is still on offer because I could not find references to it on ABSA’s website at the time of posting.
• Thirt – an escrow service which accepts payment from the buyer and passes it on to the seller only after the buyer is satisfied with the goods.
• Debit Cards / Cheque Cards – the fastest emerging payment system, with funds loaded into the card and spent according to what is available.

One of the best payment methods available in 45 countries world wide, excluding South Africa, is the Paypal system. Paypal uses e-mail to send and receive payments electronically. The simplicity of this system, combined with a cash incentive when it was launched, caused an explosive growth in Paypal users. The majority have always been eBay users, and it did not take long before eBay decided to buy Paypal. Right now South Africans can only send money with Paypal and not receive money.

For South Africans shopping at international websites a credit card is still a must. Until there is an alternative, perhaps from Google or Amazon.com that allows South Africans a different way to make payments and receive payments the potential for local online retail stores will be limited.

So you really don’t have to use a credit card. There are some alternatives and they are all very secure. The number of debit cards is also growing and, with smart card technology they will offer the same kind of functionality that credit cards offer users today. In face I would recommend you get a “cheque card” that is being offered by First National Bank, Nedbank, Standard Bank and ABSA because they offer an actual VISA/Mastercard credit card number linked with your cheque account. When you use it as you would a credit card the money is deducted from your cheque account instead of the credit/loan which where you would pay interest.

Using these “cheque cards” is a major step forward in enhancing your ability to shop in a cashless environment. For me it’s allowed me to regulate my spending and also to carry less cards in my pocket. So if you have a problem keeping your credit card balances in check, excuse the pun, this pay just be the way to go.