Network tokenization guide

$10 million per year. That’s how much global brands miss out on revenue. It’s the flip side of the R360 million local consumers pay in offshore card fees each year. 

Why? Because most global brands rely on international processing to sell to South African customers. Localisation comes with a long list of blockers: local entity requirements, unpredictable regulation, cross-border complexity, and a payment landscape that looks nothing like home. Merchants struggle to enter, customers struggle to pay.

The result is a persistent gap between global platforms and local people. One that limits growth, excludes users, and keeps South Africa off the list of priority markets.

“It’s an approach with significant and costly blind spots,” says Ruaan Botha, Precium’s co-founder and CEO.

“First, it locks out the majority of banked South Africans whose debit cards have international payments switched off by default. Second, it penalises those who can pay, by tagging every transaction with foreign bank fees. And third, it exposes merchants to unnecessary costs: higher interchange, double FX spreads, avoidable declines, chargebacks, and opaque ‘bundle’ fees that obscure true performance.”

“But global merchants have another option, and it doesn’t require local incorporation.”

How to localise without local incorporation‍

The key lies in a proprietary model developed by Precium and Novo42 over the past 18 months. Today, Novo42 offers the only compliant Merchant of Record (MoR) solution with regulatory approvals in place to give global merchants access to local payments without requiring a local entity.

As the MoR, Novo42 assumes full legal and financial responsibility for each transaction. This includes managing customer disputes and chargebacks, supporting domestic payment methods, handling FX exposure, and ensuring compliant cross-border settlement.

When paired with Precium’s high-performance acceptance and payout infrastructure, the result is a model built for global merchants: reliable, flexible, integration-ready, and grounded in deep compliance and tax expertise. Funds are collected locally and settled offshore, with no changes to your global platform, pricing, or contracts.

Purpose-built for global to feel local

“Global platforms, whether for streaming, gaming, or learning, already view localisation as a priority,” says Erica Bester, MD of Novo42. “The merchants we work with have often localised other parts of their experience for local customers, such as geo-based pricing for subscriptions. But until now, they’ve lacked a streamlined means to enter and operate in South Africa.”

“Our model ensures global brands can operate in South Africa as effortlessly as they do at home. But more than moving money, we help them meet customers where they are. True localisation means more than integrating every payment method, it means understanding how people earn, spend, and make decisions. Financial realities in South Africa are as varied as its people. Our job is to help global brands navigate that complexity and create payment experiences that feel familiar, trusted, and built for real life here.”

Connect with us to understand our all-in-one solution to compliance, payments and FX.

Expanding into new markets presents both challenges and opportunities for global businesses. South Africa, with its dynamic economy and rapidly evolving digital landscape, stands out as a promising destination. 

1. High internet penetration and reliable connectivity

Data Insight: South Africa has one of the highest internet penetration rates in Africa, with approximately 72% of the population online, translating to over 43 million internet users as of 2024 (1). Major urban centres like Cape Town, Johannesburg, and Durban are at the forefront of digital connectivity, supported by robust broadband infrastructure and expanding fibre optic networks.

Opportunity: This widespread and reliable internet access creates an ideal environment for businesses offering digital goods and services. With mobile internet accounting for over 90% of usage (2), there is a significant opportunity for merchants to cater to a mobile-first audience.

2. A digitally engaged population

Data Insight: South Africa’s youthful demographic is a driving force behind its digital engagement. 44% of the population is under the age of 25 (3), with strong inclinations towards digital platforms, including social media, streaming services, gaming, and online education.

Opportunity: This tech-savvy generation is not only comfortable with digital interactions but actively seeks out new and innovative digital experiences. Businesses can capitalise on this by offering digital products such as e-books, streaming subscriptions, and online courses tailored to young consumers.

3. A mature e-commerce ecosystem

Data Insight: In 2023, Africa added more new e-commerce shoppers to the world than any other region. In South Africa alone, the value of e-commerce transactions is expected to surge to $12 billion in 2025, catalysed by changing consumer behaviour, widespread internet penetration, and market entry of global brands such as Amazon. Digital goods are a significant part of this growth, with online learning, digital gaming, and subscription-based content seeing steady popularity.

Opportunity: This mature ecosystem provides a solid foundation for digital merchants, reducing entry risks and offering a conducive environment for growth. Digital goods, in particular, avoid logistical hurdles like shipping and import costs, making them an attractive category.

4. Advanced digital payments infrastructure

Data Insight: South Africa has a well-established digital payments infrastructure, with a variety of options, including credit and debit cards, mobile wallets, and bank transfers. Account to Account payment methods such as Capitec Pay are driving rapid digital inclusion of card-averse customers, increasing the total addressable market for digital commerce.

Opportunity: This advanced payment landscape lowers barriers for international merchants, enabling seamless transactions in South African Rands while ensuring compliance with local regulations. Payment providers like Precium offer solutions tailored to merchants entering the market.

5. Thriving digital entertainment market

Data Insight: Digital entertainment is a growing sector, with nearly 40% of South Africans engaging in some form of online gaming (4). Streaming services, digital music, and video-on-demand platforms are also experiencing increased adoption.

Opportunity: Businesses in the digital entertainment and gaming space can tap into this well-established audience. Monetisation models such as subscriptions, in-game purchases, and premium content have strong potential in the market.

6. Demand for localised and affordable digital education

Data Insight: The demand for online education is surging, with the e-learning market expected to reach R2 billion ($105 million USD) by 2025 (5). Online tutoring, educational software, and skills-based learning platforms are becoming increasingly popular.

Opportunity: Businesses that localise digital learning content to meet the needs of South African learners will find strong demand. Affordable and skills-focused education tools are particularly well-received, especially those aimed at job readiness and professional development.

7. Tech-savvy middle class with rising disposable income

Data Insight: South Africa’s middle class comprises approximately 18 million people, with increasing spending power on digital goods and services (6).

Opportunity: This segment is actively investing in digital subscriptions, software, and online services. Businesses offering convenience and digital innovation are likely to find a receptive audience.

8. Government support for digital economy growth

Data Insight: The South African government is prioritising digital transformation, e-commerce, and online payment modernisation through regulatory reforms and broadband investments (7).

Opportunity: A more structured regulatory framework creates a secure operating environment for digital merchants. Compliance, data privacy, and consumer protection standards are improving, making it easier for international businesses to establish themselves in South Africa.

9. Opportunities in digital payments and financial services

Data Insight: South Africa has a diverse digital payments ecosystem with over 200 active fintech companies (8). Consumers are increasingly comfortable using various digital payment methods, including DebiCheck and mobile payments.

Opportunity: For online merchants, this familiarity with digital transactions means an easier conversion process for digital goods. Payment providers like Precium help facilitate secure and compliant transactions, improving conversion rates and reducing payment friction.

10. Presence of reliable partners for market entry

Data Insight: South Africa has an established ecosystem of service providers assisting international businesses, including logistics, compliance, and digital payments (9).

Opportunity: Merchants don’t have to enter the market alone. By partnering with experienced providers, they can mitigate risks and navigate the specific needs of South African digital consumers more effectively.

If you're a global merchant or payment platform looking to compliantly expand into and process local payments in South Africa, connect with us to explore how we can support your African expansion ambitions. 

Data Sources

1. Statista, 2024 – Internet penetration in South Africa
2. ICASA, 2024 – Mobile internet usage statistics
3. World Bank, 2023 – Demographics report on South Africa
4. Newzoo, 2024 – Gaming trends in South Africa
5. Research and Markets, 2024 – South African e-learning industry report
6. Business Tech, 2024 – South Africa’s middle-class spending trends
7. South African Government Gazette, 2024 – Digital economy policy updates
8. Fintech Africa, 2024 – South Africa’s fintech ecosystem growth
9. Trade & Investment South Africa, 2024 – Market entry support for businesses

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Most businesses think of payments as a cost centre. The smartest ones see payments as a retention tool. For businesses that rely on regular, consistent payments from customers, this reframing is a necessity in order to grow. 

In this article, we discuss how embedded payment experiences can keep subscribers engaged and paying for longer. 

Why payment experience matters for retention

Subscribers are hard to win, but easy to lose. And they increasingly expect more than just a great product or service — they want a seamless experience across every touchpoint. Churn, whether it is voluntary or involuntary, is an ever present risk. But how can businesses get ahead of the problem? 

By weaving smart payment options into creative retention strategies, merchants can turn routine transactions into loyalty drivers and opportunities for deeper customer engagement. 

Three ways to retain and delight customers with embedded payments 

1. Supercharge smart payment plans with rewards 

A primary risk to recurring payments businesses is voluntary churn. 

Voluntary churn is when a customer chooses to cancel their subscription because they no longer want to continue their relationship with your business. The reasons for voluntary churn range from a customer having a disappointing experience to not seeing the value of the product or service they’re paying for. 

Recurring payment businesses can capitalise on the growing popularity of reward programs to get ahead of voluntary churn. 

By connecting benefits and savings to uninterrupted or long-term payments, merchants can demonstrate real value that will make customers feel not only more comfortable maintaining their payment, but also happy to. 

Idea starters: 

• Annual payment discounts that genuinely excite customers (10-20% savings)
• Premium features bundled with longer payment commitments
• Exclusive perks for customers who choose specific payment methods
• Rewards for uninterrupted payment “streaks” or on sign-up anniversaries 

Real impact: In a 2023 study of 6000 consumers, it was found that 48% of subscribers feel more valued when rewarded for loyalty and 82% would stay subscribed if they were given loyalty incentives. 

Some recurring payments businesses can benefit from running dual loyalty programs: a free program to reward past, consistent payments, and a paid program to encourage future payments. Paid loyalty programs generate value by changing customer behaviour; reports suggest that not only will customers who are a part of a paid loyalty program increase their purchase frequency but they will also spend more per basket. 

For example, Checkers offers customers Xtra Savings as a free loyalty program to reward shoppers. The immediate benefit makes Checkers an obvious choice, whether shopping in-person or online. 

This is combined with Xtra Savings Plus – a paid loyalty program designed to influence future payment behaviour by giving members rewards like unlimited basket sizes on Sixty60 (their on-demand delivery service) for a R99 monthly fee. This program pays off in the future as shoppers are more likely to choose Checkers to make the most of their subscription. 

Caution: Design your loyalty program with care. There’s only one chance to make a good impression and it needs to be valuable for both the brand and the customer. McKinsey's research on paid loyalty programs indicates that consumers expect at least a 150% return on their subscription fee through new offerings. 
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2. Turn cancellations into opportunities with personalised payment options

Sometimes things don’t go to plan so when customers hit the cancel button, smart payment alternatives can save the relationship.

Pro tip: A good business capability to develop is to conduct post-cancellation research. The feedback from your customers can be used to develop insights into where you should focus your efforts. 
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Idea starters: 

• Best for gyms: temporary payment holidays for customers facing short-term challenges such as an account pause 
• Best for internet service providers: flexible payment date adjustments to match customer paydays
• Best for streaming services: one-time discount offers at the critical moment
• Best for car rental or lease: split payment options for customers managing cash flow
• Best for insurance providers: switching to different payment methods that better suit their needs

Real impact: In PYMNTS’ Subscription Readiness Report 2023, some of the top drivers of subscription cancellations were: 

• Subscription was renewed without approval (31%)
• Misinformation about recurring charges (29%) 
• Inability to pause or skip subscription (27%)
• Inability to change subscription frequency (23%)
• Unavailability of digital wallet payments (22%)
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Transparent, flexible payment options are critical to preventing cancellation before it happens. Designing checkout experiences that clearly outline the terms of the recurring charge and offer customers multiple frequencies and payment options proactively address drivers of cancellation, ensuring resources are allocated to the most complex win-back cases. 
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3. Make reactivation as simple as possible 

Customers who experience involuntary churn may want to reactivate their subscription. The key is simplicity, ensuring a seamless pathway to payment.  

Real impact: Involuntary churn is when a customer’s payment fails, leading to the cancellation of their subscription. Unlike voluntary churn, the customer is not explicitly choosing to stop doing business with you. While it sounds like a glitch that seldom happens, involuntary churn makes up 20-40% of typical churn rates – making it a top priority for businesses to solve. 
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Idea starters: 

As with cancellation, it’s better to prevent failed payments than to recover them.

• Minimise involuntary churn with automatic updating of card-on-file information when a customer’s card is replaced or expires. 
• Partner with a payment processor that offers end-to-end redundancy and offers features like cascading and multi-acquiring to mitigate failures. 
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If reactivation is required: 

• Embed secure payment links directly in live chats or email threads so customers can reactivate without leaving the conversation. 
• Enable one-click reactivation with stored payment details. 
• Offer multiple recurring payment methods like card, EFT debit order, or Capitec Pay.
• Make switching payment methods seamless. A failed payment at this crucial moment might result in a customer lost permanently. Make it easy to update details or switch methods.

Real impact: Businesses using chat-integrated payment flows see significantly higher conversion rates. According to a Campaign Monitor report, if a visitor engages with a live chat agent, they’re 2.8 times more likely to end up purchasing a product. In fact, 38% of customers reported making a purchase after having a good session with a live chat agent.
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Tips for activating customer retention strategies 

1. Experimental mindset 
   
   • Pick one retention strategy to enhance with payment experiences
   • Test with a small customer segment
   • Measure impact and scale what works
     
     
2. Insights-led innovation 
   
   • Conduct frequent research with your customers to uncover pain points 
   • Look for sustainable rewards that are good for the brand and customer
   • Design rescue offers that solve real customer pain points
     
     
3. Simplify 
   
   • Audit your payment experience from sign-up to reactivation
   • Look for opportunities to reduce clicks and decisions
   • Make payment method switching effortless

The bottom line 

Smart payment experiences aren’t just about processing transactions efficiently, they’re about creating moments of delight that keep customers coming back. Happy returning customers means consistent recurring payments, and ultimately sustainable growth for the business. 

Take a look at your customer journey today: where could smarter payment experiences reduce friction and boost retention?

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