Personal Finance Financial Planning

Run on numbers: why cash still rules despite digital growth

Corrie Kruger|Published

Despite the rapid advancement of digital banking in South Africa, cash usage continues to grow at 9% per capita annually. This analysis explores why cash remains essential for marginalised communities, how banks are responding differently to digitisation, and what this means for financial inclusion in a country with deep economic divides.

Image: File

The digital economy is not without challenges, especially for the less educated and or marginalised groups. According to a Reserve Bank report in 2023, “The South African economy has remained structurally the same in the last 60 years. Despite the significant progress made to digitise the payments landscape, cash usage in South Africa remains resilient and in defiance of corporate desires. Cash in circulation in South Africa has been growing at a compound annual growth rate (CAGR) of 12% over the last few decades, and 9% when calculated per capita”.

1.  A few incidents in my personal experience made me question the move to a cashless society. A person who has worked as a gardener in South Africa for the last twenty years, just before he went back to his homeland for retirement, had his entire life savings, exceeding R80,000, withdrawn from his bank account without his knowledge. The bank in question was unable to assist him with the theft. In another case, a widow received an amount exceeding R400,000 from her late husband’s estate. The money was withdrawn from her bank account within one month. The bank in question told her that their investigations show that her personal device was used to access her account, and she, as an elderly pensioner, was left without a cent. Both these instances involved an elderly person. It is quite clear that the elderly from different race groups do not fully understand the risk associated with having access to their bank accounts via a device of their choice, such as a smartphone. 

2. Whilst on a recent holiday in Gqberha, we needed to make use of a coin-operated launderette. A visit to a nearby shopping mall left us in shock to discover that none of the major banks offered cash withdrawal services, as they were all digital only, and we were unable to obtain the five rand coins needed to operate the laundry. In an interview with an office worker at a primary school, the lady explained the school’s problems with digital banking. The school is situated in a middle-class area where many homes have domestic workers. Of these workers, a large percentage originate from neighbouring countries and other African countries. The children of these workers all attend the nearby school. In analysing the proof of address, the school found that a large proportion of them consisted of the same address. It was established that there existed an illegal market provider that sold false proof of addresses to these individuals for them to have their kids attend the school. Some of these workers also use the same document to open bank accounts, whilst the majority wish to receive cash send transactions for their salaries, and in turn they wish to pay school fees in cash. 

3. Recent statistics showing a decline in domestic workers may be underestimating the numbers based on the reality that many foreigners are working as domestic workers and they prefer to be off the financial grid, i.e., they earn and pay in cash. Sweetsouth CEO Lourandi Kriel, noting that pre-pandemic employment of 1.2 million has dropped to just 800,000-850,000, meaning more than one in five domestic workers has lost all work. As we move further down the line with the digital economy, we find that the many car guards and the street vendors of fruit and other goods are paying a massive price for the lack of cash in the wallets of the middle class. Statistics indicate that cash use is slowing down in city centres, but in rural areas, people are still reliant on cash as their preferred method of payment. Much of that is perhaps also related to the lack of digital infrastructure in rural areas.

4. Cash displacement in a digital economy? 

Despite the growing push towards digital payments, cash continues to dominate in South Africa. But as panellists at the BankservAfrica Payments Conference 2025 made it clear, the future of cash lies in its coexistence with digital, not its displacement. At the highest level in South Africa, the Phala Phala incident is still vividly in the minds of all our citizens, despite our regulators and even the Reserve Bank governor, who has turned a blind eye.  Latest news reports have stated that the couch that was used to stash the dollars in is no longer to be seen in Phala Phala.

 

The World Bank notes on its website that financial inclusion "facilitates day-to-day living, and helps families and businesses plan for everything from long-term goals to unexpected emergencies."

Key Takeaways

  • Financial inclusion is an effort to make everyday financial services accessible to a broader segment of the world's population at an affordable cost.
  • Financial inclusion may refer to geographical regions, consumers of a specific gender, consumers of a specific age, or other marginalized groups.
  • Financial inclusion may lead to greater overall innovation, economic growth, and consumer knowledge.
  • Advancements in fintech, such as digital transactions, are making financial inclusion easier to achieve.

While the barriers to financial inclusion have been a long-time problem, several forces are now helping broaden access to the kinds of financial services that many affluent consumers take for granted.

According to the Reserve Bank. “The payment system landscape in South Africa is experiencing significant changes. The advent of mobile payments, the discontinuation of cheques, the entry of non-bank payment service providers, and the emergence of new forms of retail payments that do not directly draw on bank accounts, such as e-wallets, are some of the recent changes that have been observed.”

5. Banks have different views on the importance of ATM’s

Absa Bank’s narrative on reducing ATMs in its portfolio is not just about eliminating them due to concerns such as crime, related security issues, and potential harm to customers. According to the bank, decisions are based on customer behaviours, and their intent for reductions is based on optimisation.  

The notable odd one out is Capitec, which is expanding its ATM footprint whilst the other banks are reducing theirs.

This statement from Capitec sets out their take on the matter. “We believe that real service means showing up where it matters most: in the heart of communities, adding that its expansions will help serve more clients in their communities and languages.” 

One comment from some customers is striking: “First, the banks wanted the customers to transact outside banking halls to reduce the cost associated with retail space, and ATMs were introduced. Now they want to do away with that as well to drive down cost even further.” The bank that revolutionised banking in South Africa, Capitec, is increasing its ATM footprint. One can only wonder.

SpendTrend25: - “Objective: To analyse trends in South African consumer spending, digital payments, and financial behaviour. Sample Size: 700,000 Discovery Bank clients (transactional data), 5,000 survey respondents.

DIGITAL IS THE NEW DEFAULT: 67% of South Africans now rarely or never use cash, and over 80% prefer digital or card payments.  Digital wallets, contactless payments, and even crypto are becoming part of the everyday checkout experience".

The above may be true for Discovery clients who are known to be in the higher income brackets and illustrate the wide divide between the affluent community and the masses.

The clear leader is the youngest of them all, Capitec. It makes one wonder how such a different approach is possible within the same market environment.

Latest media reports indicate that a major international bank is heading to South Africa. The London-based Revolut, a digital banking and payment service, is going to create competition for local digital banks.

As things stand, the winner in the banking space in South Africa is clear, and it is Capitec, and they are sticking to the recipe that made them the most valuable bank. As per the Reserve Bank in 2023, “There are significant concerns that consumers are not being heard or understood, and their needs are not catered to".

* Kruger is an independent analyst.

** The views expressed herein are not necessarily those of Personal Finance or Independent Newspapers.

PERSONAL FINANCE