South Africans kiss cash goodbye
Digital transactions are growing rapidly in South Africa, with banks recording a decline in the use of cash for everyday transactions.
Crucially, with the development of technology enabling real-time payments, digital channels are increasingly displacing cash in lower-value transactions.
Standard Bank revealed this in a recent analysis of its clients’ payment trends, which showed that South Africa’s digital payments landscape is undergoing a seismic shift.
The bank stated that demand for instant payments is growing, and the mobile banking app is replacing older interfaces as the preferred method of payment.
Over the past year, Standard Bank South Africa recorded a 21% growth in digital payments initiated by its personal and private banking customers in South Africa.
The demand for instant transactions exploded, with Payshap adoption rising tenfold since its 2023 launch, and Real-Time Clearing (RTC) volumes leaping by over 40% year-on-year.
Even traditional electronic fund transfers (EFTs) continue their upward trajectory, underscoring the comprehensive embrace of digital payment solutions.
“This dramatic increase signals not just heightened consumer comfort and expanded solution offerings, but a fundamental change in how South African consumers conduct their payments,” Rufaida Hamilton, Standard Bank’s Head of Payments in South Africa, said.
The past years’ experience was consistent with a long-term trend, with Standard Bank’s personal and private banking division recording consistent month-on-month growth in digital payments.
However, not all digital avenues are following the same path. USSD cell phone payments have declined in volume by 32% year-on-year, and recurring weekly payments aren’t keeping pace with the overall growth pattern.
“While we continue to monitor these trends, they indicate that clients are adapting to true digital in transitioning to the mobile app, and client payment patterns are evolving,” Hamilton said.
Therefore, activity on the bank’s mobile app is growing rapidly, driven by the rising use of smartphones and demand for on-the-go transactions.
Across internet banking, mobile app and USSD, EFTs continue to be the most preferred among digital payment methods, retaining a 50% share of electronic payments.
However, real-time clearing has grown rapidly and now accounts for 28% of electronic payment transactions, becoming the second most widely used method after EFT.
This can be seen in the graph below, courtesy of Standard Bank.
Payment trends
Standard Bank’s data also revealed trends among different client segments, detailing how different South Africans spend their money.
The most active group making payments among consumers is between the ages of 36 and 45, reflecting higher economic activity and digital adoption in this client base.
Conversely, digital payment activity among clients over 65 shows the least digital payment activity, the bank said.
“However, while this age group dominates transaction volume, the 16-25 age range exhibits the most significant year-on-year growth, showing us that this generation has a greater propensity to embrace digital financial solutions fully,” Hamilton said.
Geographically, digital payment activity mirrors regional economic activity. Gauteng leads the charge, accounting for 38% of all payment activity in any given month.
This is followed by the Western Cape (18%) and KwaZulu-Natal (17%). Conversely, the North-West Province represents the region with the lowest transactional activity.
In terms of timing, while digital payment activity occurs throughout the month, a significant surge occurs between the 25th and 3rd.
This aligns with salary payment periods and heightened retail activity. Conversely, the periods between the 7th and 12th and 16th and 22nd experience a noticeable decline in payment activity.
A minor mid-month peak, driven primarily by government employee salary payments, provides a slight uplift during this period.
This surge in digital payments, particularly among younger segments, signals a decisive shift in how customers want to bank.
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