End of an era for ATMs in South Africa
The South African Reserve Bank (SARB) is pushing ahead with its new cash strategy, which proposes a massive shift for ATMs in the country.
The SARB recently published a Position Paper on Cash in South Africa, outlining three primary objectives for cash: reducing costs, ensuring equitable access and securing physical currency.
While digital payments continue to rise in prominence, cash remains essential for over two-thirds of transactions in South Africa, especially in rural areas, informal markets and lower-income households.
Half of the cost of cash is also believed to be borne by consumers, which the SARB estimates at around R89 billion per year.
The SARB’s Cash Smart Strategy thus seeks to expand cash accessibility by establishing a regulatory framework for the deployment of white-label ATMs.
This would be done via a national cash utility and licensing non-banks to improve access to wholesale cash.
The SARB said that white-label ATMs are a central access mechanism for sustaining cash availability, especially for traditional bank-owned ATM infrastructure, which is rationalised.
The Reserve Bank noted that white-label ATMs are envisaged as part of the “utility-coordinated access layer that facilitates geographic rebalancing.”
Unlike traditional ATMs in South Africa, which are operated and branded by a commercial bank, white-label ATMs lack branding and are accessible to all South Africans, regardless of their bank.
These white-label ATMs are also expected to lower fees for customers across South Africa, as non-branded ATMs incur no fees.
These ATMs are envisaged to serve neglected areas and reduce the time and travel costs borne by cash-reliant travellers.
Speaking to the media, Deputy Governor of the Reserve Bank Rashad Cassim noted that the SARB has an important societal role to play.
He noted that the SARB looks at market efficiencies and would be happy for the private sector to lead the innovation if it is better at doing so than state institutions.
However, there are issues: urban areas are home to many ATMs, while rural areas often lack access to these cash systems.
Still working with the players
The proposed change to ATMs marks a massive policy shift and threatens banks and logistics partners that have invested billions into the network.
Cassim said that engagement on the position paper is ongoing and that the SARB is aware that many businesses operate in line with current regulations.
He added that the SARB will release new information on its Position Paper in the coming months.
The SARB’s plan for the National Cash Utility is to consolidate all cash centres under a single umbrella.
However, in response to questions from BusinessTech, he said it is still too early to see how this will be implemented.
The SARB could take over the cash centres, which would increase its assets and costs, or it could partner with banks in a stake.
The SARB recently took a 50% stake in PayInc, formerly BankservAfrica, as it looks to expand the rollout of Payshap. PayInc’s other shareholders include the big the nation’s big five banks.
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