The flexibility provided by cash – it is accepted just about anywhere – still makes it the most popular way to pay for goods and services in South Africa.

However, a recently published report by the Reserve Bank on the payments space shows that although cash dominates in transaction volumes, debit card payments carry, on average, higher transaction values.

So, while cash may be king, debit cards are increasingly the power behind the throne.

“South Africans use cash most often as a payment method, irrespective of what they buy,” said the report. “However, there is a lower average value (R208.44/transaction) for cash payments compared to the overall value of payments across all payment methods, which is R529.21/transaction,” the Reserve Bank found.

“Although almost everyone uses cash as a payment method, it represents only 21% of the total payment value, again reiterating the small average value per payment.”

Cash vs debit cards

The Reserve Bank report drew on two surveys: the Survey of Consumer Payment Choice (SCPC) and Diary of Consumer Payment Choice (DCPC). The SCPC – deemed a recall approach – was based on consumer choice and focused on preferences, awareness, usage, reasons for adoption and barriers to entry. The DCPC measured actual payments over a set period of days over a three-month period.

Data from the report shows debit card payments are the second largest payment method by volume in South Africa, accounting for an estimated 34% of the total across the three-month study period. Cash, on the other hand, represented 56% of all payments by volume.

Read: MTN takes MoMo fintech battle to South Africa’s streets

When looked at through the payment value lens, however, the analysis flips on its head, with debit card payments accounting for 55% of transaction value. Cash accounted for an estimated 21% of transactional value.

The average transaction value for credit cards was R1 141.10, while the same figure for banking apps was R1 136.80. It was higher still for internet banking at R2 132.96.

Safety concerns regarding cash still dominate the reasons cited by users for opting for digital payments over cash, with 55% of survey participants saying keeping cash on their person is risky. Interesting to note, however, is that the cost of cash is in some ways just as prohibitive as the danger factor: 27% of participants reported that it was too expensive to withdraw cash, while the same proportion of those surveyed said ATMs were no longer safe places to withdraw money.

In a December 2023 episode of TechCentral Show, township economy expert GG Alcock predicted that most transactions worth more than R50 would become digital in time: via debit cards, banking apps or rapid payment platforms like PayShap. The Reserve Bank study made similar predictions. – © 2024 NewsCentral Media