South Africa saying goodbye to cash

South Africans increasingly use digital channels to conduct transactions, with a significant rise in the use of debit and credit cards to purchase groceries and clothing. 

Data from Standard Bank’s card division showed strong growth in card-acquiring transactions across various businesses and consumer segments. 

Businesses of different sizes and industries saw increased transaction volumes and values, highlighting a continued shift towards digital and cashless payments.

Digital transaction volumes recorded a double-digit increase of 15% year-on-year, and digital transaction value rose by 11%. 

Standard Bank’s transacting merchant base saw an increase of 8% year-on-year in December 2024. This upward momentum in card transactions underscores the growing role of card payments in consumer spending.

The festive trading period — 20 to 27 December 2024 — saw even higher activity across all Standard Bank’s business segments, with the total card acquiring value and volume growing by 20% for the transactions processed,

Card acquiring turnover, according to the digital transactions processed, also saw notable increases across key sectors and regions, reflecting the widespread adoption of digital solutions. 

The particular sectors and provinces that saw the strongest growth among Standard Bank’s transacting merchants are outlined below:

• Top sectors by turnover growth in December 2024 were:
  • Grocery stores – up 26% YoY
  • Clothing stores – up 20% YoY
• Top regions by turnover growth in December 2024 were:
  • Gauteng – up 20% YoY
  • Western Cape – up 30% YoY
  • KwaZulu-Natal – up 17% YoY

“We continued to see e-commerce transactions growing significantly, especially amongst small businesses, with trends indicating that migration to electronic payment channels is set to continue through 2025,” Standard Bank’s Norman Nyawo said.

As more businesses adopt digital payment solutions, Nyawo expects the focus to shift towards operational efficiency. 

Key areas of growth include online payment platforms, mobile-first commerce strategies, and data-driven financial solutions that enable business expansion.

The rising use of digital channels to conduct transactions has led to banks significantly changing their physical infrastructure across South Africa. 

Data shows a significant decline in cash withdrawals and deposits since 2019 as more customers embrace digital banking alternatives.

This shift was primarily accelerated by the Covid-19 lockdowns, which pushed many customers toward card payments and digital banking channels.

This has come with significant growth in its digital transaction channels, with Standard Bank’s Banking App alone experiencing a 200% increase in transaction volumes since 2019.

Thus, by October 2024, monthly in-branch cash withdrawals had fallen by 64%, and branch cash deposits had dropped by 61% across personal, business, and corporate segments compared to 2019. 

The decline is evident across all customer segments, though its scale varies. 

Standard Bank’s head of personal and private banking, Kabelo Makeke, said this is part of a strategy from banks to adjust their services to better align with customer needs. 

“This aligns with our strategy to enable cash transactions through self-service and other alternative cash distribution channels while keeping branches focused on sales, service, and relationship banking.”

The most significant decline in cash deposits in the branch has been among personal banking clients, with an 83% drop in the past five years, it said.  

This is because many of them now largely rely on ATMs and retailers to fulfil their cash withdrawal and cash deposit needs. 

The cash transactions left in the branch are predominantly the bulk and high-value transactions that the ATMs cannot handle.

This shift does not come without casualties, with Standard Bank and some of the other traditional banks in South Africa making significant changes to their physical infrastructure. 

The traditional Big Four banks — Absa, Standard Bank, Nedbank, and FirstRand (FNB) — have shut down ATMs across South Africa as they have become inefficient to operate. 

The digital offerings from these banks have largely replaced the need for ATMs but have not impacted the need for a branch experience.

Some services cannot be offered through digital platforms and still require personal interactions, maintaining the need for a significant branch network.

This article was first published by Daily Investor and is reproduced with permission.