For a long time, payment innovations have focused on user experience: the emergence of new applications, digital wallets, contactless payment cards, and speeding up the purchase process. However, a real shift in payment systems is happening at the infrastructure level, which allows banks and businesses to move funds more intelligently, securely, and flexibly.
The Application of Recurring Payments
Recurring payments have become an integral part of modern business models, covering subscriptions for media content, insurance premiums, utilities, SaaS platforms, and membership services. Nevertheless, the mechanisms that many companies use were not originally designed for the needs of modern digital commerce.
Account-based payments allow customers to authorize regular transactions directly from their bank account, eliminating common issues such as expired cards or fraud detection triggers. Instead of relying on card networks, this model utilizes open banking infrastructure, such as Capitec Pay. Customers approve mandates once in their banking application, after which payments are processed automatically.
Advantages Over Cards
Card subscriptions often fail for reasons unrelated to the customer's financial capacity: cards can expire, limits can change, or fraud checks can intervene. When payments fail, companies lose revenue, and customers face unnecessary disruptions. As subscription and pay-as-you-go models continue to grow, the supporting payment infrastructure needs evolution.
In South Africa, a significant part of this evolution is occurring at the infrastructural level through platforms connecting banks, customers, and businesses. The company Pay@, founded in 2007, operates in this layer, creating a payment network that unites payers and sellers across various banks, retail partners, mobile platforms, and digital channels through unified integration.
The Role of the Aggregation Platform
This level of aggregation is critical for modernizing payments. Instead of every bank or business developing and maintaining complex integrations independently, a common platform provides the transactional infrastructure connecting them, allowing for faster implementation of payment innovations. For businesses, this means one integration can support multiple types of transactions, including real-time payments, digital invoicing, and recurring operations. For banks, it enables the introduction of new payment features without disrupting core systems.
How Capitec Pay Works
A prime example of this approach is the implementation of Variable Recurring Payments (VRP) through Capitec. Capitec Pay allows customers to authorize regular payments directly from their bank account via the Capitec app. The customer safely approves the mandate once within the app, after which payments are executed according to the agreed schedule.
Behind the scenes, Pay@ became the first third-party payment service provider integrated with Capitec, helping to establish it as a payment method within open banking, allowing payers to connect to the Capitec infrastructure for direct payment through the Capitec app. The process is simple: the customer selects Capitec Pay when registering for the service, the service sends a secure payment request to the Capitec app, the customer verifies and approves the mandate once, after which regular payments are automatically made according to the terms, and both the seller and the customer receive real-time confirmation.
Significance of Infrastructure for Sellers
For sellers and businesses operating on subscriptions, the implications are substantial. Reliable payment systems are the foundation of any recurring revenue model, and even a small number of failed payments can seriously affect cash flow, customer churn, and operational costs.
Account-based payments increase payment reliability in three ways: they reduce dependence on card networks, minimizing failures due to expired cards or scheme-level issues; they provide real-time confirmation and reconciliation, helping finance and operations teams track payment success and simplifying accounting; and they often lower transaction costs, especially with large volumes of recurring payments, compared to card networks.
Customer Control and Trust
For the customer, the shift to account-based payments resolves an old problem—control. Previously, debit mandates could be an opaque process: a customer might notice a deduction on a statement but not always recall the exact circumstances of the mandate authorization.
Systems like VRP change this situation. Initial authorization occurs within the customer's own banking ecosystem, where they clearly see the seller, the payment terms, and the frequency of deductions. This strengthens trust, and approval within the app adds a layer of security.
A Collaborative Model of Innovation
An important takeaway from developments like Capitec Pay is that payment innovations rarely happen in isolation. Fintech infrastructure providers offer integration layers and transaction mechanisms. Banks provide trusted channels for customers. And sellers provide use cases. When all elements work in harmony, a simplified process emerges, allowing participants to quickly launch new payment models without having to build complex systems from scratch. This collaborative approach is becoming defining for the next stage of payment innovation.
The Future of Payments
The most visible parts of fintech attract the most attention: applications, interfaces, and customer-facing features. However, the real transformation is happening deeper in the technology stack. Payment infrastructure—the platforms connecting banks, sellers, and customers—is changing how money moves in the economy. In South Africa, the new Variable Recurring Payment model from Capitec demonstrates how infrastructure-oriented design can enable new payment models without complicating things for users, while Pay@ allows payers to connect to this system via the Capitec app. As recurring payments grow across various industries, this infrastructure will play a key role in business efficiency, fund movement, and customer control over their finances. The future of payments is defined by infrastructure, not just another application.
