While SnapScan, eWallet, Zapper, Nedbank Money, Capitec Masterpass, Skrill and uKheshe may all be popular digital wallet apps for cashless transactions, notes and coins are the payment option favoured by most South Africans this peak buying season.
According to the country’s banking sector clearing department and official payment system operator Bankserv, preference for cash is particularly evident over holiday periods such as the festive season. Bankserv says there is R182bn circulating in cash, with orders of R84bn processed during December last year.
With the annual peak trading period and the festive season gearing up, a sharp increase in cash transactions is anticipated, with retailers encouraged to support customer choice by enabling shoppers to pay by card, with smart devices or with cash.
Mark Templemore-Walters, retail fintech Cash Connect’s operations director, says as many as 90% of transactions in South Africa are still settled with cash. This is because of the many people who don’t have bank accounts or cards.
Cash was convenient, not impacted by load-shedding and offered consumers privacy without the need for a card terminal, computer or smartphone.
— Cash Connect operations director
Mark Templemore-Walters
He says retailers that choose to go cashless risk shutting out customers who can’t use cards or digital payments because they don’t have a smartphone, an ID document and proof of addressed required to open a bank account — as is the case with vulnerable populations, people in rural areas and foreign nationals.
Recent research by the Bureau of Market Research found that about 11% of transactions over the Black Friday and festive season periods will go through informal retailers. And most of these operate on a cash-only basis. Accenture research shows that 80% of South Africa’s population visits spaza shops daily.
Running a point-of-sale device that accepts credit card transactions remains expensive for many small businesses, especially pavement vendors. This is because the payment devices need to be purchased and kept charged.
Research from fintech company Stitch found that about 50% of consumers favoured cash for convenience, 41% felt it was safer, 25% said the fees for digital payments were too high and 22% preferred it because of the anonymity.
Templemore-Walters said while there was a lot of hype around digital wallet apps, cash was convenient, not affected by load-shedding and offered consumers privacy without the need for a card terminal, computer or smartphone.
In May the Reserve Bank launched a new range of upgraded notes and coins — the first since 2018. The currency has stronger security features and is easier to use for the visually impaired.
At the time of the launch, Reserve Bank governor Lesetja Kganyago said while they were hoping to see increased digitalisation of SA’s payment system, he expected cash to “be with use for a long time to come” and the Reserve Bank would therefore continue to upgrade the country’s currency.
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