In South Africa nowadays, Debit cards are gradually replacing physical money. The use of payment cards take the lion share of transactional value in the country. Although, cash with being used in higher volumes, and the flexibility it renders make it to be acceptable just about anywhere, making it the most popular way to pay for goods and services in South Africa.
According to a recent article published by Reserve Bank, while cash spending dominates in transaction volumes, debit card dominates in transaction values.
To make it more understandable, this simply means that the rate at which people use cash for purchases is higher than debit card. However, debit cards are being used to carry out transactions that involve in huge payments than using cash.
Cash is the king in transaction volume and debit card is the king in transaction values. Debit card payments accounted for 55% of transaction value, with cash at just 21%. So, while debit card may be king, cash is significantly the power behind the throne.
In addition to what the article said, South Africans prefer to use cash often, especially when they’re purchasing items with low transaction values. 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.
However, despite the fact that almost everyone in South Africa uses cash as their primary payment method, it represents only 21% of overall value of all payments made. This suggests that cash is often used for smaller purchases, as the average value per cash transaction is relatively low compared to other payment methods like debit cards.
Furthermore, Debit card payments are the the second largest payment method by volume in South Africa. Debit card payment accounts for an estimated 34% of the total payment made. Cash payment, which is the largest payment method by volume, represented 56% of all payments made in the country.
It’s also important to note that credit cards, banking apps, and internet banking also handle higher average transaction values, with internet banking leading at R2 132.96. Safety concerns and the cost of withdrawing cash drive many users towards digital payments, with 55% citing the risk of carrying cash and 27% finding ATM withdrawals either too expensive or unsafe.
Predictions suggest that digital payments will dominate for transactions over R50, as forecasted by experts like GG Alcock and supported by the Reserve Bank.
In a nutshell, while cash remains a common and most used payment method in South Africa, its value in transactions is significantly lower compared to debit cards, which account for 55% of transaction value in the country.
