Findings from the latest Global Cash Index by PYMNTS, reveal that cash is most definitely still king in South Africa. With our beloved tangible payment option making up 50% of consumer transactions and 58% of the nation's GDP, it's safe to say that cash isn't going anywhere. FYI: Kontant is koning means cash is king!
The analysis, which was published in June looks at 'cash share as a percentage of South Africa's GDP, its evolution over the past 10 years and its growing competition from alternative payment methods'. South Africa is the largest economy in Africa and like other emerging economies has a 'high propensity' for cash. Even though cash popularity has relatively declined in SA, the country's GDP growth suggests that 'cash usage is projected to increase'.
We've heard of the money transfer app M-Pesa, and the successful splash it made in Kenya, but did you know that it was a failure in South Africa? It seems that Vodacom, the company behind the app, did not consider the importance of cash within the nation when it aimed to attract 10 million users within three years. However, after a three-year extension Vodacom only reached 75,000, admitting defeat and bowing out.
"When it comes to payments in South Africa or Africa, in general, cash is still a king. Sometimes, the picture is not painted accurately,"
In retrospect, M-Pesa’s failure in South Africa could have been foreseen, which is of course always easier to say in hindsight. With more than half of consumer transactions still being paid in cash, South Africa is inherently a cash-driven economy, where despite the growing penetration of mobile phones, consumers continue to use cash to pay for day-to-day needs.
To gauge the evolving state of cash in South Africa and dig into why mobile payments are struggling to gain adoption, PYMNTS recently caught up with Vusi Ndwandwe, head of retail and business banking at Absa Bank.