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PayPal expects South Africans to spend more than ZAR 37 billion online in 2016

Digital payments business PayPal says it expects South Africans to spend more than ZAR 37 billion online in 2016 as a high penetration of smartphones and cross-border shopping drive online spending, MoneyWeb reported. Mobile phones and tablets are expected to account for nearly ZAR 12 billion of the total – a 70 percent growth on 2015. By 2017, mobile payments are expected to contribute more than ZAR 19 billion to online spend of ZAR 46 billion.

Based on a recent Ipsos survey of more than 800 adult internet users, PayPal finds that 57 percent of them shopped online in the past 12 months. The majority shopped domestically only, while roughly a third shopped domestically and cross-border. The US, the UK and China attract most of South African offshore spend for reasons including better prices (China), as well as access to items not available in South Africa and greater product variety (US and UK).

The estimated cross-border spend for 2015 was ZAR 9.5 billion, the bulk of which went to the US, and the figure is expected to grow by 42.3 percent in 2016.

Among the most significant barriers to shopping cross-border are shipping costs, concerns that items are not delivered or are not in the expected condition when delivered, as well as worries around the security of personal and financial details. PayPal recently introduced a refund and return service, where it covers the cost of up to 12 returns per year at a maximum of USD 30 per return for users of its payments service.

While TFG has not yet seen any cannibalisation of its store traffic, Cooke believes that its online presence attracts people who may shop online exclusively, while also making it easy for customers to shop the group's entire set of brands in one go and 'check out' in one bag.

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