The future demand for card-switching services in South Africa

Genesis Analytics was commissioned by a national payment switch to determine a strategy for its card-switching business considering the increased competitive pressure faced from international card schemes.

The analysis began with mapping the payments landscape, and analysing domestic and international payments trends to understand the impact of those on card adoption and use. As an example, the team estimated the rise of e-commerce (and innovative security protocols) and the positive impact this would have on card use. Analysis also involved stakeholder interviews with banks, regulators and payment service providers to gauge their perceptions of the national switch and its role in the payments network.

To understand the threat to the card business, the team analysed the role of international card schemes, services provided to banks and other financial institutions, pricing and regulatory considerations. The final element of the analysis was an operating model assessment of the card business, i.e. how much did the card business contribute to revenues, what were the operational costs, and what would be the impact of closing the card business.

The analysis was then synthesised to develop a number of strategic options available to the national switch. These were workshopped and tested against different scenarios to evaluate the impact of each option. Evaluation criteria included cost implications, revenue and growth potential, complexity to implement, innovation potential, value to stakeholders and required regulatory support.

This level of analysis allowed the executive management team at the switch to determine a way forward.