South Africa saying goodbye to cash

Banked South Africans are increasingly shifting to digital payment channels, with FNB’s latest data revealing that the digital-to-cash transaction ratio among its customers reached 88.9% in December 2024.

This figure relates to FNB’s personal banking clients. The ratio for its private banking clients reached 96.3% in December 2024.

According to Christelle Pretorius, FNB’s personal core banking CEO, the company is shifting its benefits from cash to digital payments by reducing real-time payment rates, among other changes.

“There are some behavioural trends such as the growing adoption of digitised payment solutions that we’ve incorporated into our enhancements and benefits,” she said.

The bank tracked cash versus digital payments, which include point-of-sales (POS) transactions, debit orders and EFTs, real-time clearing, and PayShap transactions, throughout 2024.

Based on this data, it calculated a digital-to-cash transaction ratio for each month of the year.

The ratio climbed by over a percentage point from January to December 2024 for personal banking clients.

As of January 2024, the figure was around 87.7%, meaning only 12.3% of transactions were recorded as related to cash. By December 2024, only 11.1% of FNB personal transactions were related to cash.

For FNB’s private banking customers, roughly 95.8% of transactions were made via digital channels in January 2024, meaning only 4.2% involved cash.

The ratio had increased to 96.3% as of December 2024, when only 3.7% of transactions involved cash.

“Our customers are already using digital payment solutions 89% of the time, and in the private segment, that’s already sitting at over 96%,” said Pretorius.

She added that POS transactions contribute primarily to this ratio, and that FNB is seeing growing demand for real-time payments.

The charts below show FNB’s transaction data through 2024 across its personal and private banking segments. The white dotted line shows its digital-to-cash transaction ratio for each segment.

Cash no longer king

The increased availability of low-cost bank accounts has aided the shift to digital transactions, both among the country’s major banking players and newer entrants like TymeBank and Bank Zero.

POS devices and their related commissions have also become more affordable through providers like Yoco and Ikhokha, making it easier for small businesses and those in the informal economy to ditch cash.

South Africans can also access scan-to-pay apps like SnapScan and Zapper, enabling businesses to accept card payments without physical terminals.

According to Discovery Bank and Visa’s SpendTrend 25 report, which shows how much money South Africans spend and how they spend it, cash is becoming less common.

Discovery Bank CEO Hylton Kallner noted the decreased use of cash in the country, even for small transactions.

“Cash is becoming less common as a payment method, with most South Africans now favouring digital transactions,” the SpendTrend 25 report reads.

“With digital payment options offering greater convenience, better incentives and increased security, cash is gradually being replaced, and this trend shows no sign of slowing down.”

While the reduction in cash use locally has been ongoing in recent years, it was previously confined mainly to higher-income individuals and larger transactions.

Previously, cash was largely viewed as a cost-free means of transacting, with no additional transaction fees.

Kallner said this view has changed, with retailers realising the cost of handling cash regarding safety and logistics.

Industries that were once reliant on cash, such as the taxi industry in Gauteng, are also shifting away from cash use.

One company, Waxd Solutions, is helping the industry achieve this through its Automatic Fair Collection (AFC) system.

According to Waxd Solutions CEO Anthony Stewart, many operators in the taxi industry are unbanked and primarily cash-based, making applying for personal and vehicle finance and home loans a challenge.

Shifting to digital payments will make it easier for these workers to secure such finance should they require it.