VAS payments are worth R27.4 billion a month – and that figure’s growing. While many industry professionals understand the value in offering VAS, Electrum Sales Exec Anton Groenewald knew hard research was needed to guide clients towards VAS gold.

South Africans are looking for convenient, fast, safe ways of accessing digital goods and services, and trust their banks, retail outlets and mobile networks to offer an expanding array of them. They’ve fast become accustomed to buying their electricity, lotto tickets, insurance and more in-store, online and through their apps. In fact, excluding deep rural areas, 98% of adults across South Africa buy value added services.

Our research involved surveying over 600 South African consumers…

While many industry professionals recognise the growth potential of value added services, few are certain about how to capitalise on it. That’s why Electrum felt it was necessary to conduct original research into digital goods and service, providing a reliable snapshot of the current state of VAS and pointing the way to profitability from it in the future.

Our research involved surveying over 600 South African consumers, as well as interviews with professionals in the banking, retail and mobile network industries. It reveals that each industry has its own approach to its VAS offerings, with their own strategies and interpretations of the market:

  • Banks offer VAS as an innovation – a value proposition that they expect to drive some revenue, but that’s not strategic to their bottom line. In addition, their view of VAS purchases as a cash-only transaction has limited their offering.
  • Retailers, as long-time suppliers of VAS, understand how virtual products help them acquire and retain consumers. They add new offerings to defend their competitive edge.
  • Until recently, mobile operators have offered services only directly related to cellular. They’ve only just begun to broaden their VAS offering for a receptive customer base.

So far, our research has revealed tantalising snippets about where these industries might focus their energies, if they don’t want to be left behind. For instance, did you know that while airtime purchases account for the highest volumes in VAS transactions, the highest value transactions are from paying bills and utilities? Or that sports betting and insurance products show potential as future winners in VAS offerings?

…digital goods and services are no longer a differentiator…

While a great deal more is yet to be uncovered by the research, what’s clear is that digital goods and services are no longer a differentiator or a nice-to-have – they’re a must-have. And as a must-have, they must be profitable.

Besides the consumer insights, we’re also particularly looking forward to collating the information from industry insiders on lessons from VAS platform implementation, and a breakdown of pros and cons for ‘build’ versus ‘buy’ models. Ultimately, we hope the report will serve as a useful guide to our clients and the retail, banking and MNO sectors at large.

If you’d like a copy of the 2020 VAS Report sent to you, click below.

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Anton Groenewald

Anton Groenewald

Anton Groenewald is Technical Sales Executive at Electrum Payments. He holds a B.Eng (E&E) Com Sci at the University of Stellenbosch. Anton has worked in various roles in the payments industry since 2009, including Software Development, Technical Project Management, Service Delivery, Business Development and Presales.