South Africans kiss cash goodbye

Digital payments are becoming more affordable and accessible in South Africa, and according to banks in the country, many residents now prefer these payment methods over using cash.

Fewer physical banknotes are used to transact in the country due to the emergence of low-cost bank accounts, affordable point-of-sale systems, and the popularity of payment systems like PayShap.

This indicates growing trust in digital payment channels, as previously, many South African adults would withdraw all their money as soon as it was deposited in their accounts.

As a result of this, most payments in the country were being processed using physical banknotes. However, this has shifted considerably in recent years.

According to Discovery and Visa’s SpendTrend25 report, digital channels offer greater convenience, better incentives and increased security, resulting in these payments gradually replacing cash in South Africa.

The companies surveyed South African consumers, and 67% of respondents said they use cash only a few times a month or not at all.

80% of respondents said they prefer to use cards or digital payments whenever possible.

“While many people still use cash for a myriad of reasons, largely out of habit, the prevalence of cash is losing its appeal,” the report reads.

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

Discovery and Visa’s data showed that cash is still often preferred for low-value transactions, or those under R100.

However, 93% of respondents said they preferred digital channels for transactions valued between R100 and R3,000.

At the same time, 99% of respondents said they prefer digital payments for transactions of R3,000 or more.

Standard Bank has recorded a significant decline in cash withdrawals and deposits since 2019, which is attributed to the increasing number of customers using digital banking channels.

“Standard Bank’s digital platforms have seen substantial growth, with the Banking App alone experiencing a 200% increase in transaction volumes,” it said.

The bank said the most significant decline in cash deposits has been observed among its personal customers, with an 83% decline in five years.

Standard Bank South Africa’s head of personal and private banking, Kabelo Makeke, said the bank is adapting to serve a more digitally inclined customer base as a result.

“We’ve tailored our branch services to focus on non-cash needs, complementing digital and self-service channels with advisory, account management, and cash services,” said Makeke.

FNB has also observed a shift in cash use among its customers. Its latest data revealed that the digital-to-cash transaction ratio among its personal banking customers reached 88.9% in December 2024.

This was up from around 87.7% in January 2024. By December 2024, only 11.1% of FNB personal transactions were related to cash.

The rise of digital payments

South African residents have various digital payment solutions available, including debit orders, electronic fund transfers (EFTs), and real-time payments.

Many affordable smartphones and smartwatches that support contactless payments through digital wallet apps also exist in South Africa, enabling residents to pay for products and services using these devices.

According to FNB’s personal core banking CEO, Christelle Pretorius, FNB’s personal banking clients use digital payments 89% of the time, while the figure for private banking customers sits at over 96%.

She noted that the bank has observed growing demand for real-time payments.

Real-time payments enable banking customers to make payments from their bank account to accounts at different banks that reflect immediately.

The PayShap Rapid Payments Programme launch in March 2023 significantly boosted the availability and affordability of real-time payments in South Africa.

BankservAfrica CEO Jan Pilbauer explained at the time that there was no well-performing economy in the world without such a payment method.

PayShap enables real-time payments via cellphone numbers as a stand-in, or proxy, for bank account numbers.

Users are required to register their cellphone number on the system, which will then act as their ShapID. PayShap has proven immensely popular among banks and their customers.

It has also introduced a request-to-pay function that lets users initiate payment requests for their customers.

Between its launch and mid-October 2024, the broader payments industry had processed more than 74.2 billion PayShap transactions worth R46 billion.

South African banks said their customers rapidly adopted the instant payments platform. Capitec reported that all banks recorded a 100% surge in monthly PayShap usage in its first year.

Absa said it recorded a 188% increase in PayShap usage between February and March 2024.

“We expect this to promote steady, continued adoption and growth in the months ahead,” said Absa managing executive for transactional everyday banking Nick Nkosi.

Standard Bank South Africa’s head of payments, Rufaida Hamilton, said the bank had seen strong adoption of PayShap.

“Since its launch, we’ve processed over 2.3 million transactions amounting to over R1.6 billion in value,” she said.

“The usage of PayShap transactions is steadily rising among our customers, with growing numbers of customers sending out PayShap proxy payments daily.”