The EU’s General Data Protection Regulation (GDPR) comes into effect
Readers will recall that we have dealt with this EU regulation a number of times since the Newsletter was launched two years ago. Unfortunately, this regulation is not just an interesting European phenomenon with no impact on businesses outside the EU. Readers will probably have received a variety of requests both from European and US to opt in to their marketing lists around the 25th May – the date the Regulation was implemented.
Why should SA businesses bother – and in particular why have US companies bothered?
The GDPR introduces powerful extra-territorial requirements on businesses collecting, processing or using data belonging to anyone living in the EU. In certain cases, even when that person is not physically within the frontiers of the EU (eg is on holidays or business). The onus of any breach of the rules falls on a company’s interests within the EU. Let’s take the example of a South African tourist company with interests in Europe; it will not be able to escape its obligations under the Regulation to secure an opt-in before it markets to European consumers from data it collected when they were visiting the Kruger Park. And the penalties are very harsh.
Therefore, it is not just the SA call centre with a European client which has to apply the GDPR. And how will this affect our own POPIA which still languishes unimplemented? In my view, it was an opportunity sadly lost not to implement the Act before the GDPR came into force. The other African countries with equivalent POPIAs were quick to realise that if they implemented they could probably get away with national laws which do not set the bar as high as the GDPR. The SA chose not to implement POPIA which now looks very outdated and will need to be significantly reviewed if it is to be accepted by the Europeans as “providing adequate protection”.
I see that a number of law firms are forecasting that the POPIA will be implemented in the second half of this year. Personally, I’ve given up guessing when – or if – the Act will be applied.
Failed Reversed Payments
One of the most active of EFA’s committees is that dealing with Online Payments. The committee met on 12 May, and among other issues, heard from the Payments Association of SA (PASA) that its members were studying the issue of failed reversed payments following complaints received from merchants.
PASA had designed a number of test cases, but at the PASA Card Payment Stakeholders’ meeting on 8 Feb in Cape Town a number of the large retailers had said that these tests were inadequate. The scope of the study has been adjusted accordingly and a dedicated email (email@example.com) has been set up for retailers (bricks & mortar and online) to use to provide examples. It was hoped that this system would identify issues that may have been missed previously in the test. If you have had problems with reversed payments do use this opportunity to let PASA know.
Banking disruption continued
Over the months this Newsletter has reported on a series of ‘banking disruptors’ – new technologies and new players in the Fintech environment. I came across an interesting report on how the young in the USA are now paying their utility and other regular bills. Between housing costs, utilities, taxes, insurance, loans, etc., US adults paid an estimated $3.9 trillion in bills last year. That market is growing slowly, but changing fast — more than ever before, customers are moving away from paying bills via check or cash and toward paying online, either through their banks, the billers themselves, or using a third-party app.
Thanks to rising customer familiarity with digital payments, an increase in purchasing power among younger consumers more interested in digital bill pay, and a rise in digital payment options, nearly three-quarters of bills will be paid digitally by 2022, representing a big opportunity for players across the space. In theory, banks should be in a great position to capitalize on this shift. Nearly all US banks offer bill payment functionality, and it is a popular feature. Issuers also boast an existing engaged digital user base and make these payments secure. But the public (especially the young) appears to be increasingly in favour of non-bank payment solutions. Could it be those traditional banking charges are the problem? Ecommerce of course is in the forefront of this development.
In another study on US banking and payments, Business Insider (BI) Intelligence, points out that the in-store mobile wallet space is becoming increasingly crowded. Most customers have an option provided by their smartphone vendor, like Apple, Android, or Samsung Pay. But those are often supplemented by a myriad of options from other players, ranging from tech firms like PayPal, to banks and card issuers, to major retailers and restaurants.
BI Intelligence has studied this issue for a couple of years now, and it projects that US in-store mobile payments volume will quintuple in the next five years, but it points out that usage is consistently lagging below expectations, with estimates for 2019 falling far below what was expected just two years ago. Nevertheless, US in-store mobile payments will advance steadily at a 40% compound annual growth rate (CAGR) to hit $128 billion in 2021. BI Intelligence recommends that mobile wallet operators should build multiple layers of value to get ahead. Adding value to the user experience and making wallets as simple and frictionless as possible are critical to encouraging adoption and keeping consumers engaged.
The Growth of Business Drones
As the Newsletter has reported previously, using drones to deliver medical supplies started a couple of years ago in Rwanda and was subsequently introduced to Tanzania. Other countries are using drones for commercial use, including SA. According to ITWeb, there are around 600 registered commercial drones in SA with just over 30 active remote operating certificates (ROCs).
The ROC is a certification issued by the South African Civil Aviation Authority (SACAA) and is compulsory for operating drones for business in SA. A new course on operating drones out of sight has now been set up in Cape Town which will conform with the SACAA-accredited beyond visual line of sight (BVLOS) training for drone pilots.
Drones are categorised as aircraft worldwide and are regulated by the existing aviation sector and civil airspace rules. In July 2015 the rules were changed in SA to permit the flying of drones. Non-commercial use does not require a certificate but beware if you break the rules (eg by flying too close to an airport) you could be faced with fines up to 50,000R and/or 10 years in prison! More than 90% of drone sales are to consumers.
Other countries are approaching the use of drones differently. In some countries air-space is tightly controlled by the military and flying your private drone would not be a good idea. In Sri Lanka drones can be flown along the coastline but not overland. There is an ecommerce company which delivers by drone to landing sports on the coast where the products are picked up by local land transport. Great idea!
Cabinet approves the first phase of a new Intellectual Property Policy
The first phase of a new intellectual property (IP) policy, developed by the DTI, was approved on 23 May. This first phase concentrates on providing better access to high-quality, affordable medicines.
DTI focused on public health in the first phase of the policy because the government had identified the local pharmaceutical industry as a priority sector for the country’s industrial development and in response to alleged price fixing by certain multinationals in the pharmaceutical industry. However, the ultimate purpose of the IP policy is to guide policy makers on how to use intellectual property to promote certain domestic development objectives, such as innovation, technology transfer and industrial development.
Ecommerce has an important interest in IP policies and we will be following government’s next phases closely.
UNCTAD Produces new report on African migration
The UN Conference on Trade and Development (UNCTAD)’s 2018 Economic Development in Africa Report, subtitled “Migration for Structural Transformation”, shows that migration within Africa is contributing strongly to national economies, despite the local protests, and the tragic deaths of migrants trying to cross the Mediterranean, which we see reported in the media. Most African migrants move within the continent. In 2017, 19 million migrants moved within Africa, while 17 million Africans left the continent. Interestingly, Africa is a migration destination for 5.5 million people who came from outside the continent
Artificial Intelligence could start to replace management consultants
Having worked for and with multinationals all my career, I can attest to the modern management saying that ‘when in doubt, of if profits dip, call in the management consultants’. Management consulting’s vulnerability to disruption is now being discussed, and as it is a primarily human-driven industry it has become a target for AI. Sounds strange? Management consultancy depends on 4 stages – information on the company (easily provided by AI), expertise (also will be provided by AI), insight and execution (still the preserve of mankind – but for how long?).
The International Trade Centre looks at ecommerce as a Driver for Developing Economies
The ITC is preparing a paper on “clustering enterprises for ecommerce”. “Clustering” means grouping enterprises together in a collaborative structure which may take any one of a number of legal forms and may serve various objectives. The ITC’s focus is on understanding and advising which of these structures is most adapted to support the needs of small firms in developing and least developed countries to conduct e-commerce. In particular ITC is looking at how SMEs from developing countries can overcome the barriers associated with exporting – and enable them collectively access services (such as payments and logistics), list in foreign websites and to handle issues of duties, taxes and returns.
EFA is pleased to be working with the ITC, which is a semi-government body set up by the World Trade Organisation and UNCTAD to promote trade between the developed and developing countries. For more information please contact me (firstname.lastname@example.org).
News from the Ecommerce Foundation
As readers know, another international body EFA works closely with is the Ecommerce Foundation. Their new Digital Handbook (https://www.ecommercewiki.org) has just been launched. It is well worth looking at. Over 27 000 experts shared their insights in the handbook. Recommended!
UNCTAD’s Ecommerce Week 2018 – report available
Readers will recall that our Co-Chairman, Dylan Piatti, and I attended this event last month in Geneva. There were some fascinating inputs, which we can now share. The Summary Report can be downloaded from the UNCTAD website: http://unctad.org/meetings/en/SessionalDocuments/dtl_eWeek2018_summary_en.pdf
And finally, what a fantastic initiative!
Readers may have seen the Pick n Pay/ Mastercard marketing campaign with a heart. From 7 May to 20 July every time a consumer makes a purchase at PnP using the ‘Tap & Go’ contactless payment option, Mastercard will automatically donate a meal. The donated meals will be distributed by FoodForward SA to vulnerable women and children through its network of non-profit organisations.
Maybe as a PnP loyalty card holder I missed seeing this in their regular emails and it doesn’t get any publicity in my local PnP, but nevertheless this is a marketing campaign which gets my top marks!