South African Merchants Face Urgent POS Upgrade Ahead of 2G and 3G Network Shutdown

Merchants across South Africa are bracing for a significant technological upgrade as the country prepares to phase out its 2G and 3G networks. This transition, set by the communications ministry with a preliminary deadline of December 31, 2027, means businesses must replace outdated point-of-sale (POS) terminals with models that support 4G or 5G technology.

The Countdown to Change

With just 42 months left before the switch-off, merchants reliant on older technologies must act swiftly to ensure they can maintain seamless connectivity to bank-managed services. Norman Nyawo, head of merchant solutions at Standard Bank South Africa, emphasizes the proactive steps being taken: “The transition to next-generation technology will not only offer improved connectivity but also unlock new possibilities for our clients.”

Advantages of Upgrading

The move to 4G and 5G POS terminals brings several benefits. Faster data transfer speeds mean shorter wait times for customers and increased throughput at tills, enhancing the overall shopping experience. These upgraded devices also boast enhanced GSM connectivity, Wi-Fi capability, and the ability to run multiple applications seamlessly without latency issues. This results in smoother operations and the potential for better inventory management through larger color touchscreens. Additionally, the advanced security features in these new terminals help reduce the risk of fraud and protect sensitive customer data.

The Cost Conundrum

Despite these advantages, the transition is not without its financial challenges. Merchants who have purchased their POS terminals outright face significant costs, having already invested heavily upfront. However, many newer devices can connect via Wi-Fi, providing an alternative to immediate upgrades. Financial services providers like FNB have adapted their systems to support various connectivity forms, ensuring merchants can continue to process transactions without relying solely on mobile networks.

Jacqui O’Sullivan, executive for corporate affairs at FNB, notes that only a small portion of their Speedpoint estate will be impacted. “For enhanced connectivity, we have also provided our customer base with the capability to connect their Speedpoint devices to their own networks via our free ‘bring your own internet’ solution. This is a gamechanger during load shedding as it enables our customers to transact at all times.”

Connectivity Challenges

While urban areas with high fiber penetration can often rely on Wi-Fi, merchants in rural and remote regions still depend heavily on mobile connectivity, particularly 2G and 3G. These older networks are cheaper to deploy and cover larger areas compared to 4G and 5G, presenting a significant challenge for mobile businesses and those in less connected areas.

Conclusion

The impending shutdown of 2G and 3G networks in South Africa marks a critical juncture for merchants. While the transition to 4G and 5G POS terminals promises numerous operational benefits, it also brings financial and logistical challenges, especially for businesses in rural areas. As the deadline approaches, the collective efforts of financial institutions and merchants will be crucial in ensuring a smooth and efficient transition, safeguarding uninterrupted transaction processing and maintaining customer satisfaction.