Absa Bank Launches Absa Pay, Revolutionizing Secure Online Transactions

South Africa’s third-largest bank by tier 1 capital, Absa, has introduced Absa Pay, an open banking API designed to enable fintech companies to securely transact with the bank’s clients.

Absa Pay will facilitate online purchases without requiring customers to enter payment card details. Instead, customers can select “Absa Pay” when shopping with merchants that support this technology. This selection redirects them to a secure Absa portal, where they must approve the transaction through the Absa banking app, adding an extra layer of security and fraud prevention.

“Earlier this year, Absa partnered with a payment aggregator and its merchant community to conduct a pilot study and introduce the API to the market,” the bank stated. “This successfully demonstrated Absa’s ability to securely process and monitor transactions through the API.”

MyBroadband has identified the payment aggregator as South African company Ozow, which was originally founded as i-Pay in 2014 by Thomas Pays, Mitchan Adams, and Lyle Eckstein. Ozow has become a prominent player in e-commerce, offering instant EFT payments, now termed “pay-by-bank.” The company reached R10 billion in processed transactions by March 2020 and has continued to grow despite initial resistance from local banks.

In November 2021, Ozow raised $48 million (then R748.8 million) in a Series B funding round led by Tencent, which included investments from Endeavour Catalyst and Endeavour Harvest Fund.

“This is a milestone in our mission to provide innovative and inclusive financial solutions that meet the changing needs of our merchants,” said Coenie Louw, head of technical operations at Ozow. “We look forward to collaborating with Absa to promote the adoption of Absa Pay and improve the digital payments landscape in South Africa.”

Absa highlighted that the launch of its API marks a significant advancement for its approximately 3 million digitally active customers.

“We are incredibly proud to collaborate with leading payment fintech companies, using open banking technology to create a seamless and safe online banking experience,” said Subash Sharma, Absa’s Chief Digital Officer for Everyday Banking. “These collaborations are crucial to maintaining a fully secure ecosystem for our customers and partners. However, we advise customers to remain vigilant and protect their digital banking credentials.”

Absa is the fourth bank in South Africa to introduce an API and the third to offer an Open Banking Platform-compliant one. According to Ozow, open banking enables third-party developers to create apps and services around financial institutions, providing safer and more user-friendly payment options.

The first “programmable bank card” in South Africa was introduced by Root, in partnership with Standard Bank. Root later shifted its focus to its insurance API product, though its RootCode technology continues through Investec’s programmable bank accounts.

Capitec launched its Open Banking API, named Capitec Pay, in March 2023, followed by Nedbank’s Direct EFT service introduced the same month.