SA ‘quickly’ shifting towards cashless
Today, around 85% of all retail payment transactions are done with cash, which equates to 60% of retail transaction value, while 34% of all consumer payments ($63 trillion in total spend) are done with cash.
This is according to a new global MasterCard report, “The Cashless Journey,” which tracks how 33 countries representing more than 85% of global GDP are progressing from cash-based to cashless societies.
MasterCard advisors’ estimate that cashless payments account for 43% of the total value of consumer payments in South Africa.
This puts South Africa in a category of countries MasterCard describe as “transitioning,” countries where cash payments account for between 40 and 60% of the value of all consumer payments.
With a readiness score of 54, MasterCard says that South Africa can be seen to have eliminated many prior impediments to expansion of cashless payments.
The study focuses on the value of all consumer payments, including those that happen beyond retail point-of-sale.
In 2011, 34% ($21 trillion) of total global consumer spend was done with cash, with cashless payments accounting for 66% ($42 trillion).
The report identifies Belgium (where an estimated 93% of the value of consumer spend was cashless), France (92%), Canada (90%), the UK (89%), Sweden (89%), Australia (86%) and the Netherlands (85%) as countries where cashless payments are nearly ubiquitous.
MasterCard attributes the broad movement away from cash to the uptake of new cashless payment technologies, such as mobile, contact-less and EMV Chip and a modern payments infrastructure.
Countries such as the United States (where an estimated 80% of the value of consumer spend was cashless) and Singapore (69%) are approaching the “tipping point” to becoming nearly cashless, and remaining cash use is largely a product of consumer habit.
Conversely, emerging economies such as Indonesia (31%), Russia (31%) and Egypt (7%) are just embarking on their cashless journey, but are in many cases changing cash share of payments at a much faster pace than developed nations.
Having relatively recently put all the elements of a modern consumer payments infrastructure in place, countries such as Brazil (57%), Poland (41%) and South Africa (43%) are now in a transitioning stage, and are quickly shifting share away from cash, MasterCard said.
The most rapid recent shift away from cash was observed in China, where cash share of the value of consumer payments is estimated to have declined by as much as 20% between 2006 and 2011.
China (where an estimated 55% of the value of consumer spend was cashless) and the United Arab Emirates (26%) are among a group of countries where the respective governments have taken strong leadership in promoting electronic payments to support their social and economic goals, the report said.
Kenya (27%) is an example where disruptive technology is contributing the most to decrease cash share of consumer spend.
“What seems to be overlooked in the policy dialogue is that cash takes time to access, is riskier to carry, and costs a country up to 1.5% of its GDP. We can’t expect the journey from cash toward electronic payments to be completed overnight, yet driven by technological advances and public-private partnerships this trend has gathered significant momentum over the past few years,” said Peer Stein, Director of Access to Finance Advisory Services at the International Finance Corporation.
According to A recent Gartner report, worldwide mobile payment transaction values will reach $235.4 billion in 2013, a 44% increase from 2012 values of $163.1 billion.
The number of mobile payment users worldwide will reach 245.2 million in 2013, up from 200.8 million in 2012.
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