South Africa must get rid of cash

The South African Reserve Bank (SARB) says demand for cash in the country has plateaued as more residents transition to digital banking channels.

According to the Payments Association of South Africa’s (Pasa’s) integrated report for the year ended 31 December 2024, released in June 2025, cash use costs the economy around R30 billion annually.

The shift away from cash accelerated due to the Covid-19 pandemic, prompting the SARB to launch its Payments Ecosystem Modernisation (PEM) programme to present effective alternatives to cash.

“A key priority is transitioning towards a cash-lite system while respecting consumer choice,” writes Tim Masela, SARB national payments department head.

“Cash costs the SARB and the economy over R30 billion annually.”

He added that reducing dependency on cash and providing effective options that offer consumers a choice is crucial.

Masela said digital payments should contribute to a more efficient and robust economy by reducing cash management costs, enhancing financial inclusion, and stimulating economic growth.

“Managing cash in the system is costly, and funds saved through digitisation can be redirected toward investment in infrastructure development and crucial social programmes,” said Masela.

The Reserve Bank says the PEM programme is a comprehensive initiative aimed at transforming the payments ecosystem in South Africa into an accessible, affordable, and secure system.

“It is designed to contribute meaningfully towards access to digital services to enhance financial inclusion, by establishing a platform for providing a suite of digital products and services,” added Masela.

The SARB reported that demand for cash is growing at a far slower rate compared to historical trends. It said cash usage typically grew in line with nominal gross domestic product.

“This trend has shifted post-Covid-19, reflecting the growing availability of digital payment options,” it said.

According to the SARB’s data, the average annual growth rate of cash demand has plateaued over the past five years, while digital payments have grown by 9% over the same period.

Driving inclusion in South Africa’s digital payments ecosystem

According to Masela, the SARB has made strides in advancing the provision of seamless, safer, convenient, affordable, and faster digital payment offerings.

“Among others, these include the phasing out of cheques, launching the new faster payments system, PayShap, in March 2023, and introducing contractless payments and quick response codes,” he said.

“While it is encouraging to see somewhat of an increase in PayShap values, the overall adoption of new digital payment channels and use of existing digital payment options in South Africa remains slow.”

Masela added that this is due to several key challenges, including over-reliance on cash, high transaction costs on some payment offerings, and fragmentation embedded in these systems.

BankservAfrica and partner banks launched the PayShap Rapid Payments Programme on 13 March 2023, significantly boosting the availability and affordability of real-time payments in South Africa.

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

Users must register their cellphone number on the system, which then acts as their ShapID. The system has proven popular among banks and their customers.

PayShap has also introduced a request-to-pay function, enabling users to initiate customer payment requests.

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 have said that many customers were quick to adopt the rapid payments system, and according to Capitec, all banks recorded a 100% surge in monthly PayShap usage in its first year.

Even a year after its launch, the usage of the rapid payments system was growing steadily, with Absa recording 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 company had also observed strong adoption of the PayShap system.

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

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