Challenges and opportunities of becoming a cashless society

South Africa is moving towards embracing a more cashless society.

However, this also comes with challenges.

Nthabiseng Mohale, Manager of Interbank and Regulatory Forums at Standard Bank Corporate and Investment Banking, said cash remains an integral part of South Africa’s economy.

“The latest data from Stats SA shows that cash circulation has remained steady since 2009, with R171 billion still in circulation in 2023.

“This data is a strong indicator that cash remains deeply embedded in the country’s consumer psyche despite the ongoing push for digital payments.”

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Cashless society

She added that there has been a rise in digital payment methods, such as PayShap.

The convenience of these digital options presents a clear value proposition to retailers and consumers alike, especially with the associated savings in the cost of cash handling and processing.

Digital payments, mainly mobile wallets and wearables, are also helping to increase card growth, providing greater convenience and accessibility for consumers.

Cash circulation remains steady

However, despite these advancements, cash still holds significant sway. Consumers in South Africa remain hesitant to fully transition to cashless solutions, citing concerns around control, trust, and safety.

Mohale said that for many, cash represents a tangible, familiar method of managing their finances, one in which they have direct control over how much they spend.

This control is significant when individuals fear hidden fees or unauthorised debit orders. Cash is perceived as a safeguard against unforeseen financial burdens.

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Debt abuse

“A history of challenges with debit order abuse in South Africa and unresolved issues with unauthorised charges has left many cautious about adopting digital payments.

“For instance, the lingering legacy of bounced debit orders and subsequent fees imposed by banks has heightened fears about the safety and transparency of digital transactions.

“Such concerns must be addressed through stronger consumer protection measures, more transparent regulations, and enhanced communication between banks and their customers.”

Unlocking opportunities in a cashless society

She said the efficiency of going cashless presents immense opportunities. The shift will likely gain momentum once consumers experience the tangible benefits of digital payments, such as reduced transaction times and lower costs.

Digital transactions, unlike cash, can be processed almost instantaneously without physical handling. As the system becomes more integrated and the cost of digital payments decreases, there is a clear opportunity for more people to shift away from cash use and towards digital transactions.

“Small traders like those operating spaza shops, who often rely on cash for day-to-day transactions, can benefit immensely from immediate digital payments.

“If payments are made instantly via mobile or digital wallets, businesses can immediately restock their inventories through online ordering, significantly improving their working capital cycle.

“This increased efficiency can also help small enterprises to build up a credit history, unlocking access to a broader range of financial services.”

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