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SA steadily transitions to less cash-centric economy

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 27 Jun 2024
Credit and charge cards account for 29% of the total card payment value in 2024.
Credit and charge cards account for 29% of the total card payment value in 2024.

South Africa is progressively becoming a less cash-centric economy, backed by government initiatives promoting electronic payment methods.

This is according to data analytics and consulting company GlobalData, which notes the transition from cash to cards is evident in the expanding number of point-of-sale terminals, which rose from 424 873 in 2020, to 531 387 in 2024.

The information is based on GlobalData’s Payment Cards Analytics, a database that provides payment cards market size and market share data for 73 geographies, including South Africa.

It reveals that card payment value in South Africa registered growth of 13.4% in 2023, driven by a rise in consumer spending.

The firm says SA’s card payments market is forecast to grow by 11.4% in 2024, to reach R2.3 trillion ($125 billion), supported by a constant consumer shift towards non-cash payments.

Sidharth Das, banking and payments analyst at GlobalData, comments: “SA remains a cash-driven society, with consumers preferring to use cash for day-to-day transactions. However, the country’s payments market is steadily shifting towards electronic payments, driven by the combined efforts of government and financial institutions.”

According to GlobalData, the central bank’s “Vision 2025” strategy includes several initiatives aimed at promoting financial literacy, with expanding the country’s payment infrastructure to support low-cost digital payments one of the key projects.

It says the growing acceptance of payment cards by retailers and a rise in contactless payments are steering the transition towards card payments.

GlobalData notes debit cards account for 70.7% of the total card payment value in 2024.

It explains that the preference for debit cards can be attributed to several factors, including growing banked population and the availability of basic bank accounts for low-income segments, and the National Development Plan of 2012, which aimed to achieve a 90% banked population by 2030 – a target that appears likely to be achieved or even surpassed.

Debit card payment frequency stands at 89.2% in 2024, up from 61.8% in 2020, the firm says. On the other hand, it points out that credit and charge cards account for only 29.3% of the total card payment value in 2024.

However, it states that banks in the country are offering various value-added benefits to increase the use of credit cards, such as rewards, discounts and cashback.

Das concludes: “South Africa’s payment card market is expected to continue its upward growth trajectory, supported by improving payment infrastructure and rise in consumer spending, coupled with government’s constant push for digital payments. The market is expected to grow at a compound annual growth rate of 9.3% between 2024 and 2028, to reach R3.3 trillion in 2028.”