South Africans should kiss cash goodbye

The South African Reserve Bank and other stakeholders, including the Consumer Goods Council of South Africa, want to eliminate cash and move to safer digital payment methods.

Cash still reigns supreme in South Africa. BankservAfrica recently said nine out of ten transactions in South Africa are still made in cash.

It further revealed that 95% of informal small business customers and 63% of formal business customers opt to pay in cash.

This data is substantiated by feedback from many of South Africa’s largest retailers, including Mr Price and Pepkor.

89% of Mr Price’s sales for its 2024 financial year were conducted in cash. The retailer’s cash transactions grew by 18.3% over the financial year.

Pepkor said its cash sales increased by 5.6% in the year through September 2023, and 90% of sales are generated in cash.

These figures show that despite numerous digital payment alternatives, most South Africans still rely on cash to transact.

This is a headache for the South African Reserve Bank (SARB), which is trying to make the country’s economy cashless.

Reserve Bank Governor Lesetja Kganyago said South Africans are over-reliant on physical cash and should transition to safer payment methods.

Part of the plan is modernising the national payment system and educating people on the benefits of digital payment channels.

The Reserve Bank’s Digital Payments Roadmap showed that almost half of South African adults withdraw all their money from their bank accounts as soon as it is deposited.

Reasons for this include a lack of trust in banks, fees associated with card transactions, and merchants’ lack of acceptance of cards in the informal economy.

Pick n Pay chairman and Consumer Goods Council of South Africa co-chairman Gareth Ackerman said this needs to change.

Ackerman said moving away from cash should mean that consumers should have more money to spend.

As such, he urged the government to launch a universal payment platform to eliminate the use of physical currency.

PayShap offers an alternative to cash

As part of the initiative to move away from cash, the Reserve Bank partnered with BankservAfrica to launch PayShap.

PayShap is a real-time, low-value, interbank digital payments service. It is already available through Absa, Nedbank, Standard Bank, FNB, Capitec, and Discovery Bank.

In April 2024, MTN South Africa partnered with Investec and Electrum to bring PayShap to its MTN Mobile Money (MoMo) service.

Data from Standard Bank shows that PayShap has experienced promising growth since its launch last year.

Over the past year, the number of Standard Bank clients who registered for PayShap grew by 9%. The active use of ShapID for transactions has increased tenfold (817%) year-on-year.

“This data clearly shows consumers increasingly seek more convenient payment solutions,” said  Rufaida Hamilton, Standard Bank’s Head of Payments in South Africa.

“Even our other immediate interbank transactions, beyond PayShap, have continued to rise, highlighting a growing preference for instant payments among our customers.”

The average PayShap payment now stands at R498, down from R594 in the first quarter of this year.

Hamilton noted this decline signals a shift towards using PayShap for micro-payments, demonstrating that the platform is fulfilling its purpose.

Since its launch in March 2023, the broader payments industry has processed over 74.2 million PayShap transactions worth a combined R46 billion.

Standard Bank has also seen a sharp rise in the use of contactless payment methods and digital wallets.

Over half of Standard Bank’s clients tap their cards or phones at supermarkets, restaurants, and fuel stations.

These payment methods now account for 53% of all bank client transactions, up from 42% just two years ago.

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