Natalie Cowling
Research Expert South Africa
Payment methods in South Africa - statistics & facts
In South Africa, cash and debit cards are the main preferred payment methods at points of sale. Cash is still considered to be a mainstay in the country, particularly among low-income earners. This is likely because they are not aware of the benefits of alternative payment channels, such as canceling out transportation costs to withdraw money and having enhanced security. The frequent use of debit cards can be associated with the country’s large portion of banked population. On the other hand, credit cards are much less frequently used. Consumers in the country are generally weary of obtaining credit and banks require stricter criteria to give out credit due to the increasing default rates.
Mobile payments in South Africa
The adoption of mobile money in Sub-Saharan Africa has emerged as a growing phenomenon. However, in South Africa, it has stagnated due to strict banking legislation. Mobile money solutions promote access to digital banking services and replace the necessity for cash and brick-and-mortar banking. On the other hand, the utilization of mobile phones at points of sale in 2023 has exhibited signs of a gradual increase over the past five years. Moreover, a significant proportion of the South African population aged 15 years and older used a mobile phone or the internet to send money as of 2022. The shortage of diverse digital payment platforms, combined with inadequate infrastructure to support them, is likely hampering the volume of digital payments.Banking and instant payments
The banking industry in South Africa is the largest in Africa by tier one capital. The already relatively high bank account penetration rate among the population is expected to continuously increase and reach a new peak by 2029. The four major banks in the country, namely Standard Bank Group, Nedbank, FirstRand (FNB), and ABSA bank, have well-grounded operating foundations which have enabled them to withstand slow growth due to the challenging global macroeconomic environment. The same four banks recently launched a new modern payment system called PayShap, which allows customers to make bank-to-bank payments that clear in real-time. Consequently, this makes the service as effective as cash transactions since the money is reflected within seconds at the point of sale, but with the added advantage of security and avoiding cash withdrawals. Nevertheless, the PayShap transfer fees charged by the above-mentioned banks provide little incentive for clients to make use of the service as cash remains a free alternative.
