A South African company called FlickPay wants to win over the country's retailers with a flexible fee structure for offering deals and loyalty programs through its smartphone app, but it operates in an increasingly crowded mobile payment market.

Based in Cape Town, FlickPay launched its app in May, joining several mobile services including Zapper and Payment Pebble, which was developed by South African bank Absa and is similar to Square in the U.S. Another entrant is SnapScan, offered by Johannesburg-based Standard Bank.  

Despite the competition, FlickPay says it has made inroads in South Africa's larger cities, including Cape Town and Johannesburg.

"What it's shown us is the market is more than ready to accept mobile payments, and they actually want mobile payments," said Zac Rusagara, head of commercials for FlickPay. Rusagara declined to say how many retailers the company had signed up as of late November, or how many people are using FlickPay,

The challenge for the company lies in figuring out how South Africa's retailers want to pay for accepting mobile payments. FlickPay's initial approach—charging retailers to offer deals through its app—is similar to one tried by U.S. company LevelUp. But in response to complaints from merchants, LevelUp eventually began offering retailers the option of paying per transaction.

FlickPay could make the same pricing option available in 2015, Rusagara said. The company also plans to charge retailers for running loyalty programs through its app.

Retailers can offer their first few deals at no cost, Rusagara said. After that, FlickPay negotiates individually with retailers to come up with a payment structure.

"At the moment we don't want to get caught up. A lot of people are focused on the business model," Rusagara said, noting that FlickPay wants to make sure its app works as well as possible.

The app relies on unique QR codes that are generated and scanned at the point of sale. FlickPay provides retailers with the USB cameras needed to scan the codes, Rusagara said. To access the code and pay, consumers open the app on their phones and enter a PIN.

An early limitation of the app is that consumers can enter the details of only one card, either credit or debit. However, FlickPay expects consumers eventually will be able to enter more than one card. "That is the next thing to launch," Rusagara said.

For now, the company is counting on deals to drive usage. Those deals are made available to consumers based on their location, Rusagara said. "We don't show you all deals. We show you the deals closest to you."

Once loyalty rewards become available, the app will automatically track and update them, he said. If a customer is supposed to get an 11th cup of coffee for free, for example, the app will remember.

The app also allows customers, if they want, to split a single bill between cash and mobile payment, Rusagara said.

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