When it comes to smartphone penetration in Africa, South Africa leads the way. Yet mobile payments are failing to catch on.
In South Africa, 37 percent of the country’s 55 million citizens have access to smartphones, however, using their phone to make payments isn’t their default choice.
Cash continues to be the trusted and most-widely used payment method in the country, with over half of consumer transactions still being paid in cash.
And that’s a lesson that eTailers and tech companies are taking to heart.
Cashing in on the unbanked
Take ride-hailing giant Uber, for instance. The country has a large number of credit card users, but when the time came for Uber to expand its operation, accepting cash was a no-brainer. In May 2016, the company began accepting cash payments across five major cities in the country.
South African eCommerce company Takealot.com, on the other hand, is casting a wider net for capturing the country’s unbanked and cash-loving shoppers by extending cash-on-delivery in conjunction with card-based payments.
Giving consumers the option to pay in cash along with alternate forms of payments is, in a way, a necessity for businesses to unlock their full potential, the findings of the PYMNTS.com Global Cash Index™ South Africa Analysis reveal. With the country’s GDP growing at a solid 8 percent CAGR, cash will continue to be the most used payment method — even with a growing acceptance of mobile and card-based payments.
Here are some other key takeaways from the new PYMNTS.com Global Cash Index™ South Africa Analysis:
- As of 2015, cash usage in South Africa as a percent of its gross domestic product (GDP) stood at 58.2 percent.
- Overall, cash usage has seen some decline with reduction in the share of over-the-counter (OTC) withdrawals, which represented 53.5 percent of GDP in 2009 and 38.1 percent in 2015.
- In South Africa, nearly $9.8 billion is now transacted through digital payments, and the volume is forecasted to grow by 16.2 percent between 2017 and 2021.
Cash maintains dominance
The PYMNTS.com Global Cash Index™ South Africa Analysis also features an interview with Vusi Ndwandwe, head of retail and business banking at Absa Bank, the second-largest bank in the country. Ndwandwe said that Africa might be the shining beacon of mobile payments success, but cash continues to be top choice. In fact, in South Africa especially, consumers put more trust in cash than any other form of payment method, and that’s a lesson, which retailers and payment processors often learn the hard way.
And though card-based payments are starting to gain traction in the South African market, Ndwandwe believes that cash usage will keep on growing in the country, with consumers continuing to use their debit cards for withdrawing cash instead of paying with them directly.
To download the analysis, please click below…
About the Index
The PYMNTS.com Global Cash Index™, a Cardtronics collaboration, focuses on the use of cash for making payments and as a payment method that equally plays a role with cards, checks, direct debit and other methods of settling up between consumers and businesses. Unlike most reported estimates of cash, our proprietary data analysis focuses on the use of cash for making payments rather than hoarding.