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South Africans Enter Phone App Marketplace, Slowly

Anton van Metzinger shows how the SnappCab app, which allows users to hail a cab and pay for it electronically, works on his smartphone. (VOA/Peter Cox)

Anton van Metzinger shows how the SnappCab app, which allows users to hail a cab and pay for it electronically, works on his smartphone. (VOA/Peter Cox)

Hailing a cab in New York is as easy as sticking up your hand on the street corner.

In Johannesburg, thanks to SnappCab, one just has to tap the screen of your phone.

Such smartphone technology has unlocked a new way to do business across the world, and in South Africa, companies are starting to tackle local problems with phone applications. And more frequently, customers here are making transactions with their phones.

Anton van Metzinger is the managing director of SnappCab. He and two partners launched their cab-hailing app in mid-September.

On a Johannesburg street, he described how the app works.

He said, "You open the app. And you literally with two clicks of a button you can order a cab. Using your GPS, you click the button, you electronically hail the cab, it connects you to the closest cabs in the area. So I get the cab driver's name, I get the company that the cab driver works for, their vehicle registration details and the vehicle description. So I know, as the passenger I know exactly which cab is coming for me and I can now track it on my smartphone."

When the cab arrives, the passenger gets an alert. When the ride is done, the passenger can pay by cash, or as a growing number of customers are doing, paying through their smartphone.

"We've been in the market only for about a month now and we already see that the credit card payment option is very popular, in fact more popular than we expected initially... People are getting used to the idea of online shopping, they're getting used to the idea of mobile, certainly, mobile shopping using their phones or their tablets to access the world and access retailers," van Metzinger said. "We predict that a year down the line, the majority of our transactions will be by credit card."

There are an estimated 14.7 million smartphones registered with South African telecom networks. That number is bound to grow as smartphone prices drop below $100 in the local market and as South African technology companies aim to launch smartphones of their own.

But this country hasn't exactly jumped headfirst into making transactions through smartphone applications - compared to some other African nations.

Arthur Goldstuck, managing director of World Wide Worx, is an author and journalist who specializes South African technology. He says the marketplace has to mature.

"It's still at a very early stage in this country…. By and large South African consumers are not yet ready to make a purchase on their phone," he said.

Goldstuck says people don’t trust or have confidence using their phones to make purchases until they are well-versed in the phone's interface and technology. He says that trust can take years to build.

"There's a phenomenon in this country and probably across Africa, that we call the digital participation curve," he said. "And it shows that the average Internet user needs to have been online for five years or more before they're ready to start transacting online."

But there have already been success stories here. Powertime is an app that was launched in 2009 to sell pre-paid electricity. Prior to the app, power users here would have to go to a fueling station or grocery store to buy pre-paid electricity.

Sebastien Lacour, the managing director of Powertime, which has built a base of 17,000 users, says, "What I find that is working in South Africa, is if you build an app that is relevant to the country because it solves a local problem. Kind of a local app for a local problem," Lacour said. "And I think that was part of the success of Powertime. It was a very, very significant issue in South Africa to buy pre-paid electricity."

He says the success of an app also depends on making the process easy for the user.

"You must make the payment process as quick and simple as possible.," he said "Because you can't ask a user to enter his credit card details on his cell phone. You need the ability to store credit card details… I think this is a key feature to any successful mobile app - the ability to have a one-step purchase basically."

With a solid group of regular customers, Powertime has now moved into paying other utilities, municipal bills and phone airtime, as well as helping small businesses set up payment systems through their websites, and their phones.