Cash still dominates 56% of transactions despite digital shift

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DUDUZILE RAMELA: The 2026 Cost of Cash Report by the South African Reserve Bank has found that, among other things, in the future cash will still be preferred by 40% of consumers for payment.

Read: Sarb wants rollout of ‘white-label’ ATMs to start in 2028

Professor Conrad Beyers is the head of the Department of Actuarial Science at the University of Pretoria. He joins us now to take a look at some aspects of this report.

Thank you very much, Prof, for your time this evening. Please help us with some definitions: What is the Cost of Cash Report? What does it essentially look to find?

CONRAD BEYERS: Well, the costs attached to cash. The major difference between cash transactions and electronic transactions is that cash is a physical thing, and that involves costs in a world where money has become largely digital.

In South Africa about 56% of all our transactions still involve hard cash. That’s a lot in a country where technically everything can be done electronically, if all the systems are in place.

Attached to that, you need to keep the cash safe, you need to make it, physically – you need to do the printing and transporting of it – [and keep] it safe. Heists of R12.5 billion have been stolen, and that is just gone.

And then there is the cost of security and all those things; that adds up to something close to R90 billion per year, which is very significant.

Interestingly, it’s also the case that the poorer part of the community of South Africa’s population is using that cash.

Which is an additional, let me say, tax on the poor community, where we really have the technology available to not have that cost on us.

DUDUZILE RAMELA: Okay. So what do we put this down to before we get into some of the findings? We have such a number of people – over 50% in the country – who prefer cash. You’ve mentioned some structural issues, but what is it that consumers are saying they prefer the cash for, and why?

CONRAD BEYERS: Well, I would not really use the term ‘prefer’, but are kind of forced to use it.

Of course, there is a nice aspect where we prefer to have cash in our pockets. If the payment is immediate, it is irreversible and does not need to be verified. So that’s nice about cash.

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Of course, simple electronic payments also have that, but many people don’t have the alternative.

You need of course to keep cash for outages, emergencies – and there might be connectivity issues.

Interestingly, from that 50% the vast majority of people who use mostly cash are poorer people, and that comes down to a kind of tax. If you use cash a lot, it will cost 5% of everything just to use the cash, not counting paying interest or anything else.

So people are kind of forced to use cash because of a lack of electronic options.

An example that I have: if I get to a parking area and there’s a car guard, I often find I cannot pay the person. I don’t have cash, and I think a lot of people don’t.

The car guards, if you go and speak to them, will say, ‘Yes, I have a QR code’ – when I ask, ‘Why don’t you have a QR code?’ But my bank and their banks don’t talk to each other. It’s not so simple. I thought that should happen.

The Reserve Bank is currently thinking about creating a system where everything talks to everything, and you can scan someone’s QR code securely with your phone and so on, and the payment goes through without all these hassles.

The digital movement is very slow, and we really think South Africa should not risk falling behind the rest of the world where, for example, in China they’re focusing on car guards and beggars.

But in China you can pay a beggar with a QR code. It’s immediate, you can pay whatever you like. It’s immediate. There’s no connecting to this or that. In principle that is totally possible even in South Africa.

That technology is available, and nearly every South African has a phone. You don’t need to have the smartest smartphone to do it; everybody is connected.

So cash, yes, for absolute emergencies – we all might have a little. But for everyday transactions we should aim at electronic.

DUDUZILE RAMELA: That’s very interesting. So to your point that consumers aren’t necessarily wanting to use cash, they are just forced to – especially in underserved areas.

The report looks at the indirect costs of cash. That includes time spent queuing, which came in at some R19.5 billion.

I wish we had the Reserve Bank, but unfortunately they couldn’t come on to tell us how we actually came to this. How do you quantify time loss?

Cash-related crime – when you spoke about cash-in-transit heists, travel time, R8.3 billion, we take it for granted, I guess, when we are in spaces where we can do so easily. You just walk around the corner, go to a garage, and there’s an ATM, et cetera. But there are people in underserved areas that don’t necessarily have this.

So maybe you can speak to us about the indirect costs of cash.

CONRAD BEYERS: Actually for all the things that you mentioned, yes, there are the direct costs. But as you said, the knock-on effects of a whole economy …

Let’s think of a whole cash economy that misses out on the immediate payment, the immediate response to prices, and all that those kinds of secondary aspects that we cannot really even measure.

The R90 billion cost of cash is the stuff we can have hard measured for. We can measure how much cash was stolen, we can measure what the travel costs are, et cetera. But you’re right, there are those extra factors that cannot be measured.

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We cannot measure how much car guards would have had if they had had access to electronic systems.

It’s of course not only car guards; it’s a lot of people who need to work in these environments, and they simply cannot.

Currently of course, there’s the ugly side of cash; it’s also because of its nice properties that it’s irreversible and quick. Fraud is also possible with cash. All of us know about that.

I heard from someone that they keep some money [on hand], ready for the traffic cop who might ask them for something.

That’s the ugly side of cash, but most people are not criminals using cash – of course not. And we need to create systems to make [going cashless] possible for them; it’s not impossible.

We have examples in South Africa. We have a few new banks that have come up and opened and were licensed by the Reserve Bank: Bank Zero, TymeBank – those guys have zero, zero cost.

You can do everything, you can transfer money, you can withdraw with electronic money and transferring.

The moment you want to do a cash thing with those new banks, of course you will pay transaction costs the moment you want to do a physical thing. But every single electronic movement is completely free – and that makes sense.

Banks make money out of our money. They get interest, they can lend our money out, they get money. We don’t need to pay them for being so nice as to do transactions for us. Those are old-fashioned things.

The new-generation banks don’t ask money for electronic transfers. Of course, yes, for the physical things as long as we still need them, they do, but the future of the money system is zero-costs, minimal costs for physical handling.

And where this exists, unfortunately, among the poorer community the Reserve Bank should really move fast because we are lagging. We are going to fall behind the rest of the world where these basic systems are in place.

We have the technology available; it’s not rocket science. We must just implement it.

DUDUZILE RAMELA: So it’s incumbent upon the regulator to actually bring this to fruition. What would be some of the constraints? What would be the arguments from some of the stakeholders involved in the ecosystem to say ‘Well, we’re not moving fast on this because (a) we’ll lose this’, or (b) we’re not moving fast on this because we still need to do this, etcetera’.

What do you perceive as some of the constraints that are preventing this from being realised, especially when we speak about financial inclusivity in this country, or financial inclusion?

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CONRAD BEYERS: The first point about financial inclusion is: don’t include someone and hand them a banking account and charge them a lot of money by including them in that way. Include them for real, so that they can do transactions.

I’m now hammering on the car guards: include them for real. Don’t give someone a bank account and then start charging them money.

But the counter arguments, of course, are that the traditional banks have a lot of salaries and things that they need to pay, and now they need to charge us costs over and above all the expensive interest. That is their argument – and they will have that argument.

And when the Reserve Bank comes and calls all the banks together and says ‘Guys, let’s make this simple; it is nonsense that we have a barrier with every bank that we need to deal with’.

That is a very simple administrative thing.

Yes, the banks will say, ‘No, we need to pay this guy, we need to pay Mastercard, we need to pay this and that’. Those are just vested interests.

There’s no physical barrier where those costs are needed, and that’s why the cash example that you actually brought in is an example.

The costs associated with hard cash – those are real, actual costs. You need to transport things, you need to insure against theft, et cetera.

Electronic cash does not have those costs, so the arguments fall flat and the only argument there is, yes, there can be bank heists, electronic bank heists in future, and we need to insure for that.

So maybe, yes, there’s a bit of a banking cost that they can insert there and ask us a little – but not close to the banking costs that we are seeing for transactions and electronic transactions.

So, yes, the industry will fight a bit, but I think that’s just a bit of conservatism in that respect.

The future is free movement of funds, as happens throughout the world.

DUDUZILE RAMELA: Yes, even here on the continent Rwanda has managed to achieve interoperability – though they had some hurdles. You have Nigeria. It has been found, especially by AfricaNenda Foundation, to be the number one on the continent when it comes to inclusive instant payments. So it is possible.

Professor Conrad Beyers, head of the Department of Actuarial Science at the University of Pretoria, thank you.

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